Secreted enzyme that regulates the endogenous N-fatty acyl amino acid (NAAs) tissue and circulating levels by functioning as a bidirectional NAA synthase/hydrolase (PubMed:27374330). It condenses free fatty acids and free amino acids to generate NAAs and bidirectionally catalyzes the reverse hydrolysis reaction (PubMed:27374330). Some of these NAAs stimulate oxidative metabolism via mitochondrial uncoupling, increasing energy expenditure in a UPC1- independent manner. Thereby, this secreted protein may indirectly regulate whole body energy expenditure. PM20D1 circulates in tight association with both low- and high-density (LDL and HDL,respectively) lipoprotein particles (By similarity). {ECO:0000250|UniProtKB:Q8C165, ECO:0000269|PubMed:27374330}. This is the function of PM20D1 (peptidase M20 domain containing 1, Ensembl gene identifier ENSG00000162877).