ABSTRACT A novel putative endothelin-converting enzyme (ECE) has been cloned from hydra, a freshwater invertebrate that belongs to the second oldest phylum of the animal kingdom. As an integral component of the endothelin system, vertebrate ECE functions in the activation of endothelin (ET) peptides. Vertebrate ETs are (1) the most potent vasoconstrictors known in mammals; and (2) function as essential signaling ligands during development of tissues derived from neural crest cells. To date, only a limited number of immunocytochemical studies have suggested the presence of endothelin-like peptides in invertebrates. Based on structural and functional analyses, we present evidence for a functional endothelin-like system in hydra that is involved in both muscle contraction and developmental processes. These findings indicate the broad use of endothelin systems in metazoans and also indicate that this type of signaling system arose early in evolution even before divergence of protostomes and deuterostomes.