The gram‐negative bacterial cell envelope is made up of an outer membrane (OM), an inner membrane (IM) that surrounds the cytoplasm, and a periplasmic space between the two membranes containing peptidoglycan (PG or murein). PG is an elastic polymer that forms a mesh-like sacculus around the IM, protecting cells from turgor and environmental stress conditions. In several bacteria, including Escherichia coli, the OM is tethered to PG by an abundant OM lipoprotein, Lpp (or Braun’s lipoprotein), that functions to maintain the structural and functional integrity of the cell envelope. Since its discovery, Lpp has been studied extensively, and although l,d-transpeptidases, the enzymes that catalyze the formation of PG−Lpp linkages, have been earlier identified, it is not known how these linkages are modulated. Here, using genetic and biochemical approaches, we show that LdtF (formerly yafK), a newly identified paralog of l,d-transpeptidases in E. coli, is a murein hydrolytic enzyme that catalyzes cleavage of Lpp from the PG sacculus. LdtF also exhibits glycine-specific carboxypeptidase activity on muropeptides containing a terminal glycine residue. LdtF was earlier presumed to be an l,d-transpeptidase; however, our results show that it is indeed an l,d-endopeptidase that hydrolyzes the products generated by the l,d-transpeptidases. To summarize, this study describes the discovery of a murein endopeptidase with a hitherto unknown catalytic specificity that removes the PG−Lpp cross-links, suggesting a role for LdtF in the regulation of PG–OM linkages to maintain the structural integrity of the bacterial cell envelope.