Alterations in trafficking of cathepsins B and D have been reported in human and animal tumors. In MCF10 human breast epithelial cells, altered trafficking of cathepsin B occurs during their progression from a preneoplastic to neoplastic state. We now show that this is also the case for altered trafficking of cathepsin D. Nevertheless, the two cathepsins are not necessarily trafficked to the same vesicles. Perinuclear vesicles of immortal MCF10A cells label for both cathepsins B and D, yet the peripheral vesicles found in ras-transfected MCF10AneoT cells label for cathepsin B, cathepsin D or both enzymes. Studies at the electron microscopic level confirm these findings and show in addition surface labeling for both enzymes in the transfected cells. By immunofluorescence staining, cathepsin B can be localized on the outer surface of the cells. Similar patterns of peripheral intracellular and surface staining for cathepsin B are seen in the human breast carcinoma lines MCF7 and BT20. We suggest that the altered trafficking of cathepsins B and D may be of functional significance in malignant progression of human breast epithelial cells. Translocation of vesicles containing cathepsins B and D toward the cell periphery occurs in human breast epithelial cells that are at the point of transition between the pre-neoplastic and neoplastic state and remains part of the malignant phenotype of breast carcinoma cells.