Trichloroethylene (TCE) and other halogenated alkenes are known environmental contaminants with cytotoxic and nephrotoxic effects, and are potential carcinogens. Their metabolism via the mercapturate metabolic pathway was shown to lead to their detoxification. The final products of this pathway, mercapturic acids or N-acetyl-L-cysteine S-conjugates, are secreted into the lumen in the renal proximal tubule. The proximal tubule may also deacetylate mercapturic acids, and the resulting cysteine S-conjugates are transformed by cysteine S-conjugate β-lyases to nephrotoxic reactive thiols. The specificity and rate of mercapturic acid deacetylation may determine the toxicity of certain mercapturic acids; however, the exact enzymologic processes involved are not known in detail. In the present study we characterized the kinetics of the recently cloned mouse aminoacylase III (AAIII) toward a wide spectrum of halogenated mercapturic acids and N-acetylated amino acids. In general, the Vmax value of AAIII was significantly larger with chlorinated and brominated mercapturic acids, whereas fluorination significantly decreased it. The enzyme deacetylated mercapturic acids derived from the TCE metabolism including N-acetyl-S-(1,2-dichlorovinyl)-L-cysteine (NA-1,2-DCVC) and N-acetyl-S-(2,2-dichlorovinyl)-L-cysteine (NA-2,2-DCVC). Both mercapturic acids induced cytotoxicity in mouse proximal tubule mPCT cells expressing AAIII, which was decreased by an inhibitor of β-lyase, aminooxyacetate. The toxic effect of NA-2,2-DCVC was smaller than that of NA-1,2-DCVC, indicating that factors other than the intracellular activity of AAIII mediate the cytotoxicity of these mercapturic acids. Our results indicate that in proximal tubule cells, AAIII plays an important role in deacetylating several halogenated mercapturic acids, and this process may be involved in their cyto- and nephrotoxicity.