1. The characteristics of transport and hydrolysis of twenty-two dipeptides containing basic and acidic amino acids by rat ileal rings were investigated in vitro. The peptides included combinations of basic and neutral, basic and basic, basic and acidic, acidic and acidic, and acidic and neutral amino acids. 2. All peptides studied were removed intact from the bulk phase of the incubation medium, though, in general, only free amino acids appeared in the tissue. Uptake of one or both constituent amino acids was greater from the peptide than from the equivalent amino acid or amino acid mixture in the case of at least one peptide from each group and in eighteen of the twenty-two peptides studied. In general, there was no relationship between the extent of uptake of amino acids from peptides and the extent of their hydrolysis by the system. The results support the hypothesis that there is more than one mode of uptake of amino acids from peptides. 3. Hydrolysis of γ-glutamyl-l-glutamic acid by intact intestine or intestinal homogenate was slight, and intact peptide was taken up by the tissue. Uptake of free glutamic acid from this peptide was poor. Comparison of γ-glutamyl-l-glutamic acid with three other slowly hydrolysed dipeptides, glycyl-d-valine, sarcosylglycine and glycylsarcosine, suggested that all four were transported into the mucosal cells and hydrolysed intracellularly. The results indicate that the presence of a γ-linkage or a d-amino acid, or methylation of the free amino group as in sarcosylglycine, impair both transport and hydrolysis of peptide, but that attachment of a methyl group to the N of the peptide bond, as in glycylsarcosine, impairs hydrolysis but has no effect on peptide transport. 4. l-Aspartic acid and l-glutamic acid were extensively transaminated by the intestine, whether presented as free amino acids or in peptides. Evidence was obtained suggesting that production of alanine from aspartic acid resulted from direct transamination of aspartic acid with pyruvic acid, rather than from a sequence of two reactions involving aspartate and alanine aminotransferases. 5. The results show that more rapid uptake of amino acids from peptides than from free amino acids is not confined to peptides made up of neutral amino acids, and probably occurs with many small peptides. Uptake of lysine and the dicarboxylic amino acids, which are particularly slowly absorbed from free solution, was much greater from several dipeptides than from the free amino acids. The results suggest the importance of mucosal peptide uptake in protein absorption.