Drosophila Acer (Angiotensin-converting enzyme-related) encodes a member of the angiotensin-converting enzyme family of metallopeptidases that have important roles in the endocrine regulation of blood homeostasis in mammals. Acer is expressed in the embryonic heart of Drosophila and expression in the adult head appears to be regulated by two clock genes. To study the role of Acer in development and in circadian activity, we have generated Acer null mutants by imprecise excision of a P-element and have compared their development and circadian behaviour with that of wild-type flies with the same genetic background. We show that Acer is not required for normal development, but that night sleep, which is clock regulated, is disrupted in adult flies lacking ACER. Acer null adults have reduced night-time sleep and greater sleep fragmentation, but normal levels of daytime sleep. The quality of night sleep in flies fed inhibitors of ACER is affected in a very similar manner. We have shown, using specific antibodies, that ACER is present in the adult fat body of the head and abdomen, and is secreted into the haemolymph. ACER might therefore have a role in cleaving regulatory peptides involved in metabolism and activity behaviour. There are similarities with mammals, where ACE peptidases are also expressed in adipose tissue and are thought to be part of a signalling system linking metabolism with sleep.