Dipeptidyl peptidase I (DPPI) is a cysteine protease found in many tissues, including the lung. Major cell types expressing DPPI in vitro include myelomonocytic cells, cytotoxic T cells, and mast cells. After activation and degranulation, cytotoxic T cells and mast cells secrete DPPI. With a goal of clarifying possible roles for DPPI in lung diseases, we sought to identify cells expressing DPPI in lung tissue, hypothesizing that lung mast cells are major producers of DPPI and that secreted DPPI cleaves extracellular matrix proteins. To address these hypotheses, we used immunohistochemical techniques to localize DPPI in normal dog airways, lung, and cultured mast cells, and we used purified DPPI to examine cleavage of matrix-associated proteins in vitro. We found that mast cells are the major identifiable source of DPPI in airways and that macrophages are the major source in alveoli. Within mast cells, DPPI localizes to cytoplasmic granules. We also found that DPPI endoproteolytically cleaves the extracellular matrix proteins fibronectin and collagen types I, III, and IV. The finding of DPPI in airway mast cells and its cleavage of matrix proteins suggest the possibility that DPPI plays a role in mast cell-mediated turnover of matrix proteins and in airway remodeling of chronic airway diseases such as asthma.