A neutral protease has been identified in polymorphonuclear leukocyte lysosomal granules that, with elastase, degrades casein and is inhibited by alpha1-antitrypsin. In the present studies, protease inhibitors were used to delineate the elastase and neutral protease activities against casein, because these polymorphonuclear leukeocyte lysosomal enzyme activities may have a role in lung tissue damage in alpha1-antitrypsin deficiency. The highly specific, irreversible elastase inhibitor, N-acetyl-L-analyl-L-alanyl-L-alanine chloromethyl ketone (Ac-Ala-Ala-AlaCH2Cl) inhibited approximately 40 to 50 per cent of the caseinolytic activity of polymorphonuclear leukocyte lysosomal granule preparations. The chelating agent, sodium diethylene diamine tetraacetate (EDTA), which does not inhibit elastase in the concentration used, was almost as effective as Ac-Ala-Ala-AlaCh2cl. Preincubation of polymorphonuclear leukocyte granule extract with Ac-Ala-Ala-AlaCh2cl, followed by the addition of EDTA, resulted in nearly complete inhibition of caseinolysis. These studies have characterized polymorphonuclear leukocyte lysosomal neutral protease as belonging to the class of metal-dependent proteases. Its role in the degradation of tissue remains to be determined.