We have studied a thermolysin-catalyzed solid-to-solid dipeptide synthesis using equimolar amounts of Z-Gln-OH and H-Leu-NH, as model substrates. The high substrate concentrations make this an effective alternative to enzymatic peptide synthesis in organic solvents. Water content was varied in the range of 0 to 600 mt water per mol substrate and enzyme concentration in the range of 0.5 to 10 g/mol of substrates, High yields around 80% conversion and initial rates from 5 to 20 mmol s(-1) kg(-1) were achieved. The initial rate increases IO-fold on reducing the wafer content, to reach a pronounced optimum at 40 mt water per mol substrate. Below this, the rate falls to much lower values in a system with no added water, and to zero in a rigorously dried system. This behavior is discussed in terms of two factors : At higher water contents the system is mass transfer limited (as shown by varying enzyme content), and the diffusion distances required vary. Al low water levels, effects reflect the stimulation of the enzymatic activity by water.