Extralysosomal proteolysis by multicatalytic complexes such as the 26S proteasome produces large amounts of peptides in the cytosol, mitochondria and nuclei of eukaryotic cells, and there is increasing evidence that the resulting free intracellular peptides can modulate specific protein interactions. The demonstration that free peptides added to the intracellular milieu can regulate cellular functions mediated by protein interactions suggests new putative roles for these molecules in gene regulation, metabolism, cell signaling and protein targeting. Such interactions frequently involve specific consensus amino acid sequences that can be predicted based on similarities in domain composition. We have recently developed a new strategy for identifying novel natural peptides, the sequences of which correspond to fragments of intracellular proteins and contain putative post-translational modification sites. In this review, we examine the evidence that intracellular peptides released by proteasomes may be involved in regulating protein interactions. In particular, the role of endopeptidase 24.15 (thimet oligopeptidase; EC 3.4.24.15) is discussed in detail as this enzyme has been implicated in intracellular peptide metabolism in vivo in concert with the 26S proteasome.