Proteases are considered of major importance in biomedical research because of their crucial roles in health and disease. Their ability to hydrolyze their protein and peptide substrates at single or multiple sites, depending on their specificity, makes them unique among the enzymes. Understanding protease specificity is therefore crucial to understand their biology as well as to develop tools and drugs. Recent advancements in the fields of proteomics and chemical biology have improved our understanding of protease biology through extensive specificity profiling and identification of physiological protease substrates. There are growing efforts to transfer this knowledge into clinical modalities, but their success is often limited because of overlapping protease features, protease redundancy, and chemical tools lacking specificity. Herein, we discuss the current trends and challenges in protease research and how to exploit the growing information on protease specificities for understanding protease biology, as well as for development of selective substrates, cleavable linkers, and activity-based probes and for biomarker discovery. The newly discovered roles of proteases in disease are resulting in major efforts towards protease-based therapeutics and diagnostics. With the use of better chemical tools, protease research is constantly shifting from in vitro to more in vivo-like conditions. Focused proteomic approaches are producing large datasets of protease cleavages and substrates from various physiologic and pathologic samples with potential for biomarker discovery. Profiling of natural protease specificity and identification of natural protease substrates is opening new possibilities for assay development and protease-cleavable linkers for targeted drug release evolving towards clinical applications. The first successful examples of activity-based probes are entering clinical trials. In the future we expect to see their use in applications such as whole-body imaging and image-guided surgery.