The gas-phase ion-molecule reactions of neutral alanylglycine have been examined with various mass-selected acylium ions RCO(+) (R= CH(3), CD(3), C(6)H(5), C(6)F(5) and (CH(3))( 2)N), as well as the transacylation reagent O-benzoylbenzophenone in a Fourier transform ion cyclotron resonance mass spectrometer. Reactions of the gaseous dipeptide with acylium ions trapped in the ICR cell result in the formation of energized [M + RCO](+) adduct ions that fragment to yield N-terminal b-type and C-terminal y-type product ions, including a modified b(1) ion which is typically not observed in the fragmentation of protonated peptides. Judicious choice of the acylium ion employed allows some control over the product ion types that are observed (i.e., b versus y ions). The product ion distributions from these ion--molecule reactions are similar to those obtained by collision-activated dissociation in a triple quadrupole mass spectrometer of the authentic N-acylated alanylglycine derivatives. These data indicate that derivatization of the peptide in the gas-phase occurs at the N-terminal amine. Ab initio molecular orbital calculations, performed to estimate the thermochemistry of the steps associated with adduct formation as well as product ion formation, indicate that (i) the initially formed adduct is energized and hence likely to rapidly undergo fragmentation, and (ii) the likelihood for the formation of modified b(1) ions in preference to y(1) ions is dependent on the R substituent of the acylium ion. The reaction of the tetrapeptide valine--alanine--alanine--phenylalanine with the benzoyl cation was also found to yield a number of product ions, including a modified b(1) ion. This result suggests that the new experimental approach described here may provide a tool to address one of the major limitations associated with traditional mass spectrometric peptide sequencing approaches, that is, determination of the identity and order of the two N-terminal amino acids. Analogies are made between the reactions observed here and the derivatization and N-terminal cleavage reactions employed in the condensed-phase Edman degradation method.