An enrichment technique led us to isolate 13 cyclo (Gly-Tyr)-assimilating bacteria, which had higher cyclo (Gly-Tyr)-hydrolyzing activity that the coryneform rod bacterium strain T-1-3-Y,previously isolated from soil. The cell-free extract of the strain Ol-L-2 prepared by ultrasonication in a buffer containing bovine serum albumin had cyclo (Gly-Tyr)-hydrolyzing activity while that of the strain T-1-3-Y showed no activity. GEMA (Glucosyloxyethyl methacrylate) polymer was found to be a more effective stabilizer for solubilizing cyclo (Gly-Tyr) hydrolase than bovine serum albumin.