The alkylating prodrug of melphalan, J1 (melphalanyl-L-p-fluorophenylalanyl ethyl ester) is currently in early clinical trials. Preclinical studies have shown that J1-mediated cytotoxicity is dependent on hydrolytic activity of tumor cells. In this report we have analyzed potential peptidases and esterases of importance for release of free melphalan from J1. Exposure of tumor cell lines to J1 resulted in a significant increased level of free intracellular melphalan, at least tenfold at C(max), compared to exposure to melphalan at the same molar concentration. This efficient intracellular delivery could be inhibited in both magnitude and in time by bestatin, a broad spectrum inhibitor of the aminopeptidases, including the metalloproteinase aminopeptidase N (APN, EC 126.96.36.199.), and ebelactone A, an esterase inhibitor. These effects resulted, as expected, in decreased cytotoxic effects of J1. A specific role of APN in hydrolyzing J1 releasing free melphalan was demonstrated in vitro with pure APN enzyme. By using plasmid-based overexpression of APN or down regulation of endogenous APN with siRNA in different tumor cell lines we here confirm the involvement of APN in J1-mediated cytotoxic and apoptotic signaling. In conclusion, this study demonstrates a role of APN in the activation of the melphalan prodrug J1 and subsequently, its cytotoxicity. Given that APN is shown to be overexpressed in several solid tumors our data suggest that J1 may be activated in a tumor selective manner.