Procathepsin B and cystatin C are found in human lung secretions. We investigated the capacity of human bronchial epithelial cells to synthesize and secrete these proteins. Immunoprecipitation of [35S]methionine-labeled proteins from cultured bronchial epithelial cell lysates, followed by denaturing gel electrophoresis and autoradiography, showed the presence of newly synthesized procathepsin B of M(r) 42,000; no mature form was detected. Cathepsin B in conditioned medium from epithelial cells was tagged with benzyloxycarbonyl-125I-tyrosyl-alanine-diazomethane before and after treatment of the medium with neutrophil elastase. Control medium again showed a predominant form of cathepsin B with a M(r) of 42,000, but upon treatment with neutrophil elastase this protein was converted to a M(r) of 38,000, similar to the active form previously found in lung secretions, and cathepsin B activity was generated. The medium also contained the cathepsin B inhibitor, cystatin C, but cystatins A, B, S, SN, SA, and kininogen were not detected. After removal of cystatin C from the medium, elastase was still required to activate procathepsin B. These results suggest that bronchial epithelial cells are a source of procathepsin B and cystatin C in lung secretions. Cleavage both of cystatin C and procathepsin B by neutrophil elastase is essential for the generation of cathepsin B activity in the medium.