Papain-like cysteine peptidases are a diverse family of peptidases found in most known organisms. In eukaryotes, they are divided into multiple evolutionary groups, which can be clearly distinguished on the basis of the structural characteristics of the proenzymes. Most of them are endopeptidases; some, however, evolved into exopeptidases by obtaining additional structural elements that restrict the binding of substrate into the active site. In humans, papain-like peptidases, also called cysteine cathepsins, act both as non-specific hydrolases and as specific processing enzymes. They are involved in numerous physiological processes, such as antigen presentation, extracellular matrix remodeling, and hormone processing. Their activity is tightly regulated and dysregulation of one or more cysteine cathepsins can result in severe pathological conditions, such as cardiovascular diseases and cancer. Other organisms can utilize papain-like peptidases for different purposes and they are often part of host-pathogen interactions. Numerous parasites, such as Plasmodium and flukes, utilize papain-like peptidases for host invasion, whereas plants, in contrast, use these enzymes for host defense. This review presents a state-of-the-art description of the structure and phylogeny of papain-like peptidases as well as an overview of their physiological and pathological functions in humans and in other organisms.