A group of serine peptidases, the prolyl oligopeptidase family, cannot hydrolyze proteins and peptides containing more than 30 residues. The crystal structure of prolyl oligopeptidase (POP) has shown that the enzyme is composed of a peptidase domain with an α/β hydrolase fold and a seven-bladed β-propeller domain. This domain covers the catalytic triad and excludes large, structured peptides from the active site. The mechanism of substrate selection has been reviewed, along with the binding mode of the substrate and the catalytic mechanism, which differ from that of the classical serine peptidases in several features. POP is essentially a cytosolic enzyme and has been shown to be involved in a number of biological processes, but its precise function is still unknown. Many reports addressed experimentally the possible role of POP in cognitive and psychiatric processes, its involvement in the inositol phosphate signaling pathway, and its ability to metabolize bioactive peptides. Inhibitors were designed to reveal the cellular functions of POP and to treat neurological disorders. Other studies concerned the cellular localization of POP, its presumed interaction with the cytoskeletal elements, and its involvement in peptide/protein transport/secretion processes. The possible role of POP in Alzheimer disease is an intriguing issue, which is still debated. Recently, recombinant bacterial POPs have been investigated as potential therapeutics for celiac sprue, an autoimmune disease of small intestine caused by the intake of gluten proteins.