A new type of enzyme hydrolyzing the elastase substrate succinyl-L-alanyl-L-alanine-4-nitroanilide has been found in cell-free rheuma todi synovial fluid. Normal plasma and osteoarthritic synovial fluid contained relatively little enzyme. The pH optimum was 8.0. Unexpectedly, the enzyme activity was not due to leukocyte elastase or any proteinase bound to alpha2-macroglobulin. The enzyme activity was metal-dependent being inhibited by chelating agents but not by di-isopropylfluorophos phate or thiol-blocking reagents. Gel chromatography showed the enzyme activity was associated with material of high molecular weight. On Sepharose 4B chromatography two-thirds of the activity eluted in the void volume and one-third in a position of about 106 mol wt. Utracentrifugation showed that both components were associated with lipid. The buoyant density of the higher molecular weight material was 1.15-1.22 g/ml., and that of lower molecular weight material was 1.2-1.33 g/ml. No latency of the enzyme was revealed by freezing and thawing or treatment with detergents. The nature of the enzyme is discussed. It is likely to be a proteinase possibly bound to some kind of membrane fragment.