Cleaves the gamma-glutamyl bond of extracellular glutathione tripeptide (gamma-Glu-Cys-Gly) and certain glutathione conjugates (PubMed:1676842, PubMed:21447318). Hydrolyzes glutathione releasing L- Glu and Cys-Gly dipeptide which is further metabolized to maintain extracellular cysteine levels but also to provide cysteine necessary for intracellular glutathione synthesis (PubMed:1676842, PubMed:21447318). Among glutathione-S-conjugates metabolizes leukotriene C4 (LTC4) and S-geranylgeranyl-glutathione (GGG), but is inactive toward gamma-glutamyl leucine. Converts extracellular LTC4 to LTD4 during acute inflammatory response. Acts as a negative regulator of GGG bioactivity. GGT5 (via GGG catabolism) and ABCC1 (via extracellular transport) establish GGG gradients within lymphoid tissues to position P2RY8-positive lymphocytes at germinal centers in lymphoid follicles and restrict their chemotactic transmigration from blood vessels to bone marrow parenchyma (By similarity). The transpeptidation reaction, i.e. the transfer of gamma-glutamyl moiety to an acceptor molecule to yield a new gamma-glutamyl compound requires high concentration of dipeptide acceptor and is considered nonphysiological (PubMed:21447318, PubMed:29667297). {ECO:0000250|UniProtKB:Q9Z2A9, ECO:0000269|PubMed:1676842, ECO:0000269|PubMed:21447318, ECO:0000303|PubMed:29667297}. This is the function of GGT5 (gamma-glutamyltransferase 5, ENSG00000099998).