A dephthalylation step utilizing a novel enzyme, o-phthalyl amidase, was developed. This step was part of a potentially new large scale synthetic route for a novel beta-lactam antibiotic Loracarbef. The enzyme was isolated from the organism Xanthobacter agilis. Purification of the enzyme to near homogeneity was accomplished by a 3-step procedure. Studies indicated that the phthalimido group can be opened chemically to generate the o-phthalyl derivative. This enzyme then can remove the phthalyl group from o-phthalylated amides. Optimization of the process was achieved by combining these two hydrolysis steps. Conversion yields of 85-97.8% (mol/mol) were obtained from reactions at substrate concentrations of 5-10% (w/v).