The hydrolysis pathway of a given peptide or protein in seawater, or how it is hydrolyzed by extracellular enzymes, may depend on its chemical structure or specific amino acid composition. This knowledge is important for a better understanding of the first steps on decomposition of labile organic matter that is often dominated by proteins. The hydrolysis pathway can be estimated from the hydrolyzed fragments of small peptides through incubation experiments. Here we incubated a group of small peptides with different amino acid compositions in coastal seawater, including tetrapeptides alanine-valine-phenylalanine-alanine (AVFA) and its modifications of the N terminal A with valine (V), serine (S), arginine (R) and aspartic acid (D) (i.e., peptides VVFA, SVFA, RVFA, DVFA). Through these incubations, we evaluated the effect of chemical structure or specific amino acid composition on peptide hydrolysis pathways and the roles of different types of peptidases. Our results showed that aminopeptidases preferentially hydrolyzed tetrapeptides with N terminal A and R (29–100% of the total peptidases), followed by V (30–90%) and S (20–51%), but were ineffective with acidic amino acid D (0–14%). This pattern indicates that the N-terminal amino acid affects how a peptide is hydrolyzed in a given environment. For N-terminal amino acids with uncharged side chains, aminopeptidases preferred hydrophobic A, V to polar uncharged S, and for those with charged side chains, they preferred positively-charged R to negatively-charged D. Our results also suggest that if aminopeptidases could not access the N-terminal amino acid of a peptide, carboxypeptidases and/or endopeptidases will hydrolyze it, leading to similar peptide hydrolysis rates among different peptides although their hydrolysis pathways may differ. The effect of amino acid composition on peptide hydrolysis pathways is further demonstrated by comparing trialanine (AAA), AVF, AVFA, VFA, phenylalanine-alanine-serine-tryptophan-glycine-alanine (FASWGA) and SWGA. Overall, results from this study show that the chemical structure of a peptide affects its hydrolysis pathway in coastal seawater, and shed new lights on the early steps of organic nitrogen degradation and further nitrogen cycling in marine environments.