1. A new inhibitor of thiol proteinases, benzyloxycarbonylphenylalanylalanine diazomethyl ketone (benzyloxycarbonylphenylalanylalanyldiazomethane, Z-Phe-Ala-CHN2) was added to cultured mouse peritoneal macrophages prelabelled with [14C]leucine. The degradation of protein was studied under conditions of basal proteolysis in the presence of 10% pig serum. After a lag of about 6 h a time- and dose-dependent inhibition of protein degradation was observed, up to a maximum of about 40%. 2. The inhibitor entered the cells with kinetics consistent with entry by pinocytosis, giving access to the lysosomal system. 3. Intracellular cathepsin B was almost completely inactivated after 90 min of exposure of the culture to 0.1 mm-inhibitor. 4. The inhibition of proteolysis and of cathepsin B was reversed virtually completely within 24 h, when the inhibitor was removed from the medium. Since the inhibitor forms a covalent bond with the enzyme, the recovery of cathepsin B activity presumably reflects production of new molecules of active enzyme. 5. The inhibitory effects of pepstatin, the carboxyl proteinase inhibitor, were under some circumstances additive with those Z-Phe-Ala-CHN2, and were also largely reversible. 6. It is concluded that thiol proteinases play a major role in lysosomal proteolysis in cultured macrophages.