DL-Alanylglycylglycine dihydrate is primarily used in biochemical research as a peptide substrate for studying enzyme activity, particularly proteases and peptidases. It serves as a model compound to investigate peptide hydrolysis mechanisms and enzyme specificity. Additionally, it is employed in the development of peptide-based drugs and as a reference standard in analytical chemistry for peptide identification and quantification. Its stability and solubility make it suitable for use in various experimental conditions, aiding in the exploration of peptide interactions and enzyme kinetics.