An endotoxin-activated hemocyte lysate from the horseshoe crab (Tachy-pleus and Limulus) was found to hydrolyze Bz-Ile-Glu-(γ-OR)-Gly-Arg-p-nitroanilide (PNA), Bz-Val-Gly-Arg-PNA, Boc-Val-Leu-Gly-Arg-PNA, and Boc-Leu-Gly-Arg-PNA, all of which have the COOH-terminal Gly-Arg sequence. This amidase activity was due to a clotting enzyme contained in the lysate. Furthermore, the amidase activity increased by increasing the concentration of bacterial endotoxin (E. coli, 0111-B4) added to the lysate. Therefore, the measurement of the endotoxin-induced amidase activity made it possible to determine the concentration of the endotoxin.