Increased proteolytic activity is a hallmark of several pathological processes, including neurodegeneration. Increased expression and activity of cathepsins, lysosomal cysteine proteases, during degeneration of the central nervous system is frequently reported. Recent studies reveal that a disturbed balance of their enzymatic activities is the first insult in brain aging and age-related diseases. Leakage of cathepsins from lysosomes, due to their membrane permeability, and activation of pro-apoptotic factors additionally contribute to neurodegeneration. Furthermore, in inflammation-induced neurodegeneration the cathepsins expressed in activated microglia play a pivotal role in neuronal death. The proteolytic activity of cysteine cathepsins is controlled by endogenous protein inhibitors-the cystatins-which evidently fail to perform their function in neurodegenerative processes. Exogenous synthetic inhibitors, which may augment their inhibitory potential, are considered as possible therapeutic tools for the treatment of neurological disorders.