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CXC ligand 12 (CXCL12; also known as stromal cell-derived factor 1alpha/SDF-1alpha) chemoattracts hematopoietic stem and progenitor cells (HSCs/HPCs) and is thought to play a crucial role in the mobilization of HSCs/HPCs from the bone marrow. CD26 (dipeptidylpeptidase IV [DPPIV]) is a membrane-bound extracellular peptidase that cleaves dipeptides from the N-terminus of polypeptide chains. CD26 has the ability to cleave CXCL12 at its position-2 proline. We found by flow cytometry that CD26 is expressed on a subpopulation of normal Sca-1+c-kit+lin- hematopoietic cells isolated from mouse bone marrow, as well as Sca-1+c-kit-lin- cells, and that these cells possess CD26 peptidase activity. To test the functional role of CD26 in CXCL12-mediated normal HSC/HPC migration, chemotaxis assays were performed. The CD26 truncated CXCL12(3-68) showed an inability to induce the migration of sorted Sca-1+c-kit+lin- or Sca-1+c-kit-lin- mouse marrow cells compared with the normal CXCL12. In addition, CXCL12(3-68) acts as an antagonist, resulting in the reduction of migratory response to normal CXCL12. Treatment of Sca-1+c-kit+lin- mouse marrow cells, and myeloid progenitors within this population, or Sca-1+c-kit-lin- cells with a specific CD26 inhibitor, enhanced the migratory response of these cells to CXCL12. Finally, to test for potential in vivo relevance of these in vitro observations, mice were treated with CD26 inhibitors during granulocyte colony-stimulating factor (G-CSF)-induced mobilization. This treatment resulted in a reduction in the number of progenitor cells in the periphery as compared with the G-CSF regimen alone. This suggests that a mechanism of action of G-CSF mobilization involves CD26.