The cell-free extract of an albonoursin-producing strain, Streptomyces albulus KO-23, was found to catalyze the conversion of several cyclic dipeptides having Phe and aliphatic side chain-containing amino acid residues to the corresponding dehydro derivatives. 3Z-Benzylidene-6S-methyl-2,5-piperazinedione, 3Z-benzylidene-2,5-piperazinedione, and 3Z, 6Z-dibenzylidene-2,5-piperazinedione were prepared by this conversion system. Among the dehydro cyclic dipeptides prepared, tetradehydro derivatives exhibited inhibitory activity toward the first cleavage of sea urchin embryo, while didehydro derivatives did not. We previously found that cyclo(Leu-Phe) and its didehydro derivatives did not show any inhibitory activity, in contrast to high activity in the case of albonoursin. Taken together, these findings indicate that dehydrogenation at the α, β-positions of both amino acid residues in this type of cyclic dipeptide is required for the inhibitory activity.