Cathepsin D (cathD) is traditionally regarded as a lysosomal protease that degrades substrates in acidic compartments. Here we report cathD plays an unconventional role as a cofilin phosphatase orchestrating actin remodeling. In neutral pH environments, the cathD precursor directly dephosphorylates and activates the actin-severing protein cofilin independent of its proteolytic activity, whereas mature cathD degrades cofilin in acidic pH conditions. During development, cathD complements the canonical cofilin phosphatase slingshot and regulates the morphogenesis of actin-based structures. Moreover, suppression of cathD phosphatase activity leads to defective actin organization and cytokinesis failure. Our findings identify cathD as a dual-function molecule, whose functional switch is regulated by environmental pH and its maturation state, and reveal a novel regulatory role of cathD in actin-based cellular processes.