Cysteine cathepsins are key regulators of the innate and adaptive arms of the immune system. Their expression, activity, and subcellular localization are associated with the distinct development and differentiation stages of immune cells. They promote the activation of innate myeloid immune cells since they contribute to toll-like receptor signaling and to cytokine secretion. Furthermore, they control lysosomal biogenesis and autophagic flux, thus affecting innate immune cell survival and polarization. They also regulate bidirectional communication between the cell exterior and the cytoskeleton, thus influencing cell interactions, morphology, and motility. Importantly, cysteine cathepsins contribute to the priming of adaptive immune cells by controlling antigen presentation and are involved in cytotoxic granule mediated killing in cytotoxic T lymphocytes and natural killer cells. Cathepins'aberrant activity can be prevented by their endogenous inhibitors, cystatins. However, dysregulated proteolysis contributes significantly to tumor progression also by modulation of the antitumor immune response. Especially tumor-associated myeloid cells, such as tumor-associated macrophages and myeloid-derived suppressor cells, which are known for their tumor promoting and immunosuppressive functions, constitute the major source of excessive cysteine cathepsin activity in cancer. Since they are enriched in the tumor microenvironment, cysteine cathepsins represent exciting targets for development of new diagnostic and therapeutic moieties.