Previously, we showed that carotid bodies express neutral endopeptidase (NEP)-like enzyme activity and that phosphoramidon, a potent inhibitor of NEP, potentiates the chemosensory response of the carotid body to hypoxia in vivo. NEP has been shown to hydrolyze methionine enkephalin (Met-Enk) and substance P (SP) in neuronal tissues. The purpose of the present study is to determine whether NEP hydrolyzes Met-Enk and SP in the carotid body and if so whether these peptides contribute to phosphoramidon-induced potentiation of the sensory response to hypoxia. Experiments were performed on carotid bodies excised from anesthetized adult cats (n = 72 carotid bodies). The hydrolysis of Met-Enk and SP was analyzed by HPLC. The results showed that both SP and Met-Enk were hydrolyzed by the carotid body, but the rate of Met-Enk hydrolysis was approximately fourfold higher than that of SP. Phosphoramidon (400 µM) markedly inhibited SP hydrolysis (~90%) but had only a marginal effect on Met-Enk hydrolysis (~15% inhibition). Hypoxia (PO₂, 68 ± 6 Torr) as well as exogenous administration of SP (10 and 20 nmol) increased the sensory discharge of the carotid body in vitro. Sensory responses to hypoxia and SP (10 nmol) were potentiated by ~80 and ~275%, respectively (P < 0.01), in the presence of phosphoramidon. SP-receptor antagonists Spantide (peptidyl) and CP-96345 (nonpeptidyl) either abolished or markedly attenuated the phosphoramidon-induced potentiation of the sensory response of the carotid body to hypoxia as well as to SP. These results demonstrate that SP is a preferred substrate for NEP in the carotid body and that SP is involved in the potentiation of the hypoxic response of the carotid body by phosphoramidon.