The mechanism of inhibition of cathepsin B [EC 3.4.22.1] and cathepsin L [EC 3.4.22.-] by E-64 was investigated. Kinetic studies indicated that E-64 was an irreversible inhibitor of these enzymes. [3H]E-64 is incorporated into cathepsin B in a one/one molar ratio in parallel with inactivation of the enzyme. Titration of one of the 10 SH groups of native cathepsin B with 2,2'-dithiodipyridine resulted in complete loss of enzyme activity. Decrease of titratable SH groups and activity of cathepsin B was proportional to the concentration of E-64 added, indicating that E-64 binds to an equimolar amount of active SH residues of cathepsin B. The effects of E-64 and its derivatives on lysosomal cathepsin B and cathepsin L in rat liver were studied in vitro and in vivo. The D form of E-64 inhibited the cathepsin both in vitro and in vivo, although its inhibitory effects were less than those of E-64-(L). E-64-b(RR), in which the terminal agmatine of E-64 is replaced by leucine, was as active as E-64-(L) in vitro, but was completely inactive in vivo. Among the E-64 derivatives tested, E-64-c(SS), in which the terminal agmatine of E-64 is replaced by isoarylamide, showed strong inhibitory activity in vivo, like E-64-(L).