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Gp70 is an esterase originally called crystal protein because of its presence in crystalline structures in aggregation-competent Dictyostelium discoideum cells. Although postulated to break down spore coats, the function of gp70 in vivo was incompletely investigated. Our immunolocalization and biochemical studies of vegetative D. discoideum amoebae show that gp70 was recruited to phagosomes and found in lysosomes. Purified gp70 was effective at hydrolyzing naphthyl substrates with acyl chains typical of lipids and lipopolysaccharides, indicating that the gp70 was involved in digesting endocytosed molecules. The activity of purified gp70 was inhibited by reductants that retarded its electrophoretic mobility and verified the presence of intramolecular disulfide bonds predicted by its amino acid sequence. Compared to wild-type cells, cells overexpressing gp70 were more phagocytically active, had shorter generation times, and produced more fruiting bodies per unit area, while cells lacking gp70 were phagocytically less active with longer doubling times, developed more slowly, and had significantly fewer fruiting bodies per unit area. Consistent with the phenotype of a disrupted metabolism, one-third of the gp70-minus cells were large and multinucleated. Together, these results indicated that despite its crystalline appearance, gp70 was an active esterase involved in both the growth and the development of D. discoideum.