Propeptide blocks the active site in the inactive zymogen of cathepsin D and is cleaved off during zymogen activation. We have designed a set of peptidic fragments derived from the propeptide structure and evaluated their inhibitory potency against mature cathepsin D using a kinetic assay. Our mapping of the cathepsin D propeptide indicated two domains in the propeptide involved in the inhibitory interaction with the enzyme core: the active site "anchor" domain and the N-terminus of the propeptide. The latter plays a dominant role in propeptide inhibition (nanomolar Ki), and its high-affinity binding was corroborated by fluorescence polarization measurements. In addition to the inhibitory domains of propeptide, a fragment derived from the N-terminus of mature cathepsin D displayed inhibition. This finding supports its proposed regulatory function. The interaction mechanisms of the identified inhibitory domains were characterized by determining their modes of inhibition as well as by spatial modeling of the propeptide in the zymogen molecule. The inhibitory interaction of the N-terminal propeptide domain was abolished in the presence of sulfated polysaccharides, which interact with basic propeptide residues. The inhibitory potency of the active site anchor domain was affected by the Ala38pVal substitution, a propeptide polymorphism reported to be associated with the pathology of Alzheimer's disease. We infer that propeptide is a sensitive tethered ligand that allows for complex modulation of cathepsin D zymogen activation.