The aspartic proteinase cathepsin E is expressed predominantly in cells of the immune system and highly secreted by activated phagocytes, and deficiency of cathepsin E in mice results in a phenotype affecting immune responses. However, because physiologic substrates for cathepsin E have not yet been identified, the relevance of these observations to the physiologic functions of this protein remains speculative. Here, we show that cathepsin E specifically induces growth arrest and apoptosis in human prostate carcinoma tumor cell lines without affecting normal cells by catalyzing the proteolytic release of soluble tumor necrosis factor-related apoptosis-inducing ligand (TRAIL) from the cell surface. The antitumor activity of cathepsin E was corroborated by in vivo studies with mice bearing human and mouse tumor transplants. Administration of purified cathepsin E into human tumor xenografts in nude mice dose-dependently induced apoptosis in the tumor cells to inhibit tumor growth. The growth, viability, and metastasis of mouse B16 melanoma cells were also more profound in cathepsin E-deficient mice compared with those in the syngeneic wild-type and transgenic mice overexpressing cathepsin E. Taken together, the number of apoptotic tumor cells, as well as tumor-infiltrating activated macrophages, was apparently reduced in cathepsin E-deficient mice compared with those in the other two groups, implying the positive correlation of endogenous cathepsin E levels with the extent of tumor suppression in vivo. These results thus indicate that cathepsin E plays a substantial role in host defense against tumor cells through TRAIL-dependent apoptosis and/or tumor-associated macrophage-mediated cytotoxicity.