The high-Mr alkali-stable form of cathepsin B was purified from purulent human sputum. It was shown to solubilize proteoglycan monomer entrapped in polyacrylamide at a rate comparable with that of human lysosomal cathepsin B. Like the enzyme from lysosomes, sputum cathepsin B was bound by human alpha 2-macroglobulin, which inhibited its action on proteoglycan. Cystatin C in purulent sputum was shown to be the N-terminally truncated form generated by neutrophil elastase cleavage, and sputum cathepsin B was only weakly inhibited by recombinant cystatin C that had been cleaved by neutrophil elastase in vitro. Addition of neutrophil elastase to mucoid sputum led to a 5-fold increase in cathepsin B activity concomitant with a lowering in Mr of the cysteine proteinase from 40,000 to 37,000, i.e. the size of the active enzyme purified from purulent sputum. It is concluded that the high-Mr form of cathepsin B present in purulent sputum is a functional proteinase, unlike similar forms of the enzyme secreted by mammary gland in organ culture. The activity of cathepsin B in sputum is modulated by neutrophil elastase, by a combination of inhibitor inactivation and zymogen activation.