In this paper, we present a new approach for service discovery combining semantic web and peer-to-peer techniques. A reference ontology is used to describe and discover services in our approach. We do not need a central point of control at any time. All information required for service description and discovery is completely distributed across the nodes of a peer-to-peer overlay network. We describe the design of a Semantically-enhanced Distributed Discovery System (SDDS) allowing dynamic and efficient registration and discovery of services. We also present performance analysis and discuss open issues of our system.