Cathepsin B from bovine spleen was shown to catalyze transacylation reactions between esters of N-substituted amino acids and nucleophiles. These reactions appeared to proceed through an intermediate between cathepsin B and the acyl portion of the substrate. Of the various nucleophiles tested, dipeptides were found to be the most effective acyl group acceptors. A method was devised for calculating the acylation and deacylation rate constants from increases in the maximum velocity of disappearance of the substrate with increasing concentrations of the nucleophile. The values for the second order rate constants for the reaction of the acyl-enzyme with the nucleophile, k4, were found to depend on the identity of the dipeptide, while the first order rate constants for formation and hydrolysis of the acyl-enzyme, k2 and k3, were dipeptide-independent. With N alpha-benzyloxycarbonyl-L-lysine p-nitrophenyl ester at pH 6.5, k2 and k3 were found to be 360 s-1 and 6.6 s-1, respectively, indicating that the deacylation step was rate-determining for the hydrolysis of this substrate. In contrast, dipeptide nucleophiles did not significantly accelerate the cathepsin B-catalyzed cleavage of either the p-nitroanilide or the 2-naphthylamide of N alpha-benzoylarginine, suggesting that the hydrolysis of these amide substrates was acylation rate-limiting. These findings support the suggestion that cathepsin B is mechanistically similar to the cysteine proteinase papain.