Enzymatic production of D-alanine from DL-alaninamide was investigated. A bacterial strain, NJ-26, which was identified as Arthrohacter sp., was isolated from activated sludge as a producer of a D-alaninamide specific amide hydrolase (D-amidase). This strain produced D-amidase in the presence of alaninamide as an inducer. The enzyme was purified about 260-fold to near homogeneity. The enzyme is a monomer polypeptide with a molecular weight of about 67,000 as estimated by gel filtration column chromatography. The optimal pH for activity was 7.5. It showed a high D-stereospecificity toward alaninamide. The relative velocity toward L-alaninamide was about 0.7% of that toward D-alaninamide. The Km for D- and L-alaninamide were 4.2 mM and 26.1 mM, respectively. After optimization of the reaction conditions, 105 g/liter of D-alanine was generated from 210 g/liter DL-alaninamide with over 99% enatiomeric excess as a result of cellular reaction and all of the L-alaninamide remained in the reaction mixture.