In an earlier report we described the identification of an alpha-N-acetylglucosaminyl phosphodiesterase that is capable of cleaving the outer phosphodiester-linked alpha-N-acetylglucosamine residues present on the high mannose oligosaccharides of newly synthesized lysosomal enzymes (Varki, A., and Kornfeld, S. (1980) J. Biol. Chem. 255, 8398-8401). We have now purified this enzyme 1800-fold with a 24% yield from rat liver, using subcellular fractionation, differential extraction with Triton X-10, DEAE-cellulose chromatography, heparin-Sepharose chromatography, concanavalin A-Sepharose affinity chromatography, and gel filtration on Sephacryl S-300. The purified preparation is free of lysosomal alpha-N-acetylglucosaminidase. The enzyme exhibited a single form on both the ion exchange and gel filtration steps. It has a broad pH optimum between 6.0-8.0 and is unaffected by divalent cations or reducing agents. The enzyme cleaves alpha-N-acetylglucosamine residues from five different locations on the high mannose oligosaccharide. In the case of molecules with one phosphodiester, the rate of cleavage is not affected by the size of the underlying oligosaccharide or the presence or absence of an asparagine-linked peptide. Molecules with two phosphodiesters are cleaved in a nonrandom manner. The enzyme has no activity toward p-nitrophenyl-alpha-N-acetylglucosamine but is capable of cleaving phosphodiester-linked N-acetylglucosamine in molecules such as UDP-N-acetylglucosamine, indicating that it can only hydrolyze N-acetylglucosamine residues that are alpha-linked to a phosphate group.