Herein we report the development of a direct and continuous spectrophotometric method for determining transglutaminase (TGase) activity by using N,N-dimethyl-1,4-phenylenediamine (DMPDA) as a gamma-glutamyl acceptor substrate and carbobenzyloxy-l-glutamylglycine (Z-Gln-Gly) as a typical peptide gamma-glutamyl donor substrate. The transamidation activity of TGase can thus be followed by monitoring the increase of absorbance of the resulting anilide product at 278 nm. The extinction coefficient of the authentic, independently synthesized anilide was determined to be epsilon = 8940 +/- 55 M(-1) cm(-1). Using this assay, we determined the apparent K(M) of DMPDA to be 0.25 mM, which compares favorably to the apparent K(M) values determined for other acceptor substrates under conditions where Z-Gln-Gly is also used as the donor substrate, such as N-acetyl-l-lysine methyl ester (9.6 mM) and methylamine (13.1 mM). Finally, the sensitivity of this assay technique was established through the measurement of irreversible inhibition constants for iodoacetamide, determined to be K(I) = 75 +/- 11 nM and k(inact) = (120 +/- 1) x 10(5) M(-1) min(-1).