Cathepsin B is a lysosomal cysteine protease in normal cells and tissues. In malignant tumors and premalignant lesions, the expression of cathepsin B is highly upregulated and the enzyme is secreted and becomes associated with the cell surface. Increases in expression are mediated at many levels ranging from gene amplification to increased stability of mRNA and protein. Cathepsin B is synthesized as a preproenzyme and the primary pathways for its normal trafficking to the lysosome utilize mannose 6-phosphate receptors (MPRs). Inactive procathepsin B is processed to active single and double chain forms of cathepsin B in the late endosomes and lysosomes, respectively. Tumor cells secrete procathepsin B and both active forms of cathepsin B. Secretion of procathepsin B occurs principally as a result of increased expression, whereas secretion of active cathepsin B seems to involve active processes that can be induced by a variety of mechanisms. Once secreted procathepsin B binds to the tumor cell surface via p11, the light chain of the annexin II heterotetramer. This binding seems to facilitate conversion of procathepsin B to its active forms. Cathepsin B and the annexin II heterotetramer colocalize in caveolae (lipid raft) fractions isolated from tumor cells. Serine proteases and matrix metalloproteinases also have been found to associate with caveolae and some with the annexin II heterotetramer. Our working hypothesis is that pericellular cathepsin B through its proximity to other proteases in caveolae participates in, perhaps even initiates, a proteolytic cascade on the tumor cell surface.