N-acetylated alpha-linked acidic dipeptidase is a membrane-bound brain peptidase which cleaves the neuropeptide N-acetyl-aspartyl-glutamate to N-acetyl-aspartate and glutamate. In the present study, we have determined the localization of N-acetylated alpha-linked acidic dipeptidase in the peripheral nervous system. Using enzyme assays and immunoblotting, we demonstrate that sciatic nerve, phrenic nerve, cervical dorsal root ganglion and superior cervical ganglion contain N-acetylated alpha-linked acidic dipeptidase activity as well as an N-acetylated alpha-linked acidic dipeptidase-like protein. Furthermore, we show that N-acetylated alpha-linked acidic dipeptidase-like immunoreactivity is extensively co-localized in peripheral nerves with immunoreactivity for glial fibrillary acidic protein, a known marker for non-myelinating Schwann cells. Using electron microscopy, we demonstrate N-acetylated alpha-linked acidic dipeptidase-like immunoreactivity in cell membranes of non-myelinating Schwann cells in the superior cervical ganglion. These results show that N-acetylated alpha-linked acidic dipeptidase is expressed in the peripheral nervous system by non-myelinating Schwann cells. This cellular localization suggests that N-acetylated alpha-linked acidic dipeptidase may be involved in the signalling between axons and Schwann cells, for example during development or regeneration.