Keratinocytes are an integral component of the skin immune system and function as nonprofessional antigen-presenting cells in pathophysiologic conditions when they express major histocompatibility complex class II molecules, e.g., in psoriasis. In order to analyze further this function we investigated the activity of cathepsin S in comparison with cathepsins B and L. These enzymes were suggested to be involved in antigen presentation. Specific catalytic activities of these cathepsins were determined fluorometrically by hydrolysis of a synthetic substrate (Z-Phe-Arg-7-amido-4-methylcoumarin) in subcellular fractions of human keratinocytes. It was found that the human keratinocyte cell line HaCaT exhibits activities of all three cathepsins investigated. Endosomal/lysosomal compartments show highest cathepsin activities. Normal human keratinocytes in primary culture show a comparable pattern of cathepsin activities. In contrast to this, in syngeneic Epstein-Barr virus-transformed B cells the level of cathepsin B activity was found to be 10% of that in the corresponding keratinocytes, whereas the activities for cathepsins L and S were in a similar range. Interferon-gamma stimulation of primary keratinocytes and HaCaT cells resulted in a selective upregulation of the cathepsin S activity, the extent of which was very similar. The mechanism of this upregulation was demonstrated as induction at the mRNA and protein levels. This report documents that cathepsin S in human keratinocytes is selectively upregulated, in parallel to major histocompatibility complex class II molecules, in response to a pro-inflammatory cytokine. Our observations support the concept of keratinocytes functioning as nonprofessional antigen-presenting cells in states of inflammation.