Function: Cleaves the gamma-glutamyl bond of extracellular glutathione (gamma-Glu-Cys-Gly), glutathione conjugates, and other gamma-glutamyl compounds. The metabolism of glutathione releases free glutamate and the dipeptide cysteinyl-glycine, which is hydrolyzed to cysteine and glycine by dipeptidases. In the presence of high concentrations of dipeptides and some amino acids, can also catalyze a transpeptidation reaction, transferring the gamma-glutamyl moiety to an acceptor amino acid to form a new gamma-glutamyl compound. Initiates extracellular glutathione (GSH) breakdown, provides cells with a local cysteine supply and contributes to maintain intracellular GSH level. It is part of the cell antioxidant defense mechanism. Indirectly regulates multiple aspects of skeletal biology.