The protein sequence of cytotoxic T-lymphocyte antigen-2 beta (CTLA-2 beta) is 36% identical to the proregion of mouse cathepsin L (Denizot, F., Brunet, J.F., Roustan, P., Harper, K., Suzan, M., Luciani, M. F., Mattei, M. G., and Goldstein, P. (1989) Eur. J. Immunol. 19, 631-635). Here we report the expression, purification, and characterization of recombinant murine CTLA-2 beta. The protein was purified by consecutive gel-filtration, anion-exchange, and reverse-phase (C4) chromatography. Purified CTLA-2 beta exists in solution primarily as a dimer but also as a disulfide-linked tetramer as judged by size exclusion chromatography. Circular dichroism studies suggest that the dimeric form of the protein contains 8% alpha-helix, 67% beta-sheet, and 21% random coil and also indicates that there is a conformational change upon formation of the tetramer. The protein is a competitive inhibitor of certain cysteine proteases including papain (Ki = 25 nM), cathepsins L (Ki = 24 nM) and H (IC50 = 67 nM) but not cathepsin B. CTLA-2 beta forms a noncovalent complex with cathepsin L and has a stoichiometry of binding to papain of 1 mol of CTLA-2 beta/mol of papain. There is no homology between CTLA-2 beta and any of the known cysteine protease inhibitors, including the kininogens and cystatins. Therefore, CTLA-2 beta represents a novel class of cysteine protease inhibitor that is specific for the cathepsin L family of proteases.