L-Carnosine (L-Car) is a biologically active dipeptide with antioxidant and anti-aging effects, formed by condensation of β-alanine (β-Ala) with L-histidine (L-His), which is used widely in the pharmaceutical and cosmetic industries. Here we report a dipeptide hydrolase originating from Bacillus megaterium, designated as BmPepD, whose synthetic activity reached 6.5 times that of SmPepD, which is the highest active dipeptidase reported so far for L-Car biosynthesis in vitro. By site-directed saturation mutagenesis, we obtained a significantly improved variant (T171N) of BmPepD. It showed a specific activity of 22.9 U mg−1protein, reaching 1.4 times that of wild-type BmPepD or 9.1 times that of SmPepD, which is the highest ever reported among this enzyme class. After optimizing the reaction conditions of variant BmPepDT171N, we performed the synthetic reaction of L-Car simply from the two free amino acids (0.2 M L-His and 6.5 M β-Ala), achieving a titer of 31.3 mM L-Car with a specific productivity of 283 gCar · gcatalyst−1. This work provides a highly active and substrate (β-alanine)-tolerant dipeptide hydrolase for the facile synthesis of dipeptide L-Car via reversed hydrolysis.