The obligate intracellular Chlamydiaceae do not need to resist osmotic challenges and thus lost their cell wall in the course of evolution. Nevertheless, these pathogens maintain a rudimentary peptidoglycan machinery for cell division. They build a transient peptidoglycan ring, which is remodeled during the process of cell division and degraded afterwards. Uncontrolled degradation of peptidoglycan poses risks to the chlamydial cell, as essential building blocks might get lost or trigger host immune response upon release into the host cell. Here, we provide evidence that a primordial enzyme class prevents energy intensive de novo synthesis and uncontrolled release of immunogenic peptidoglycan subunits in Chlamydia trachomatis. Our data indicate that the homolog of a Bacillus NlpC/P60 protein is widely conserved among Chlamydiales. We show that the enzyme is tailored to hydrolyze peptidoglycan-derived peptides, does not interfere with peptidoglycan precursor biosynthesis, and is targeted by cysteine protease inhibitors in vitro and in cell culture. The peptidase plays a key role in the underexplored process of chlamydial peptidoglycan recycling. Our study suggests that chlamydiae orchestrate a closed-loop system of peptidoglycan ring biosynthesis, remodeling, and recycling to support cell division and maintain long-term residence inside the host. Operating at the intersection of energy recovery, cell division and immune evasion, the peptidoglycan recycling NlpC/P60 peptidase could be a promising target for the development of drugs that combine features of classical antibiotics and anti-virulence drugs.