Cathepsin E is an intracellular aspartic proteinase of the pepsin superfamily, which is predominantly expressed in certain cell types, including the immune system cells and rapidly regenerating gastric mucosal and epidermal keratinocytes. The intracellular localization of this protein varies with different cell types. The endosomal localization is primarily found in antigen-presenting cells and gastric cells. The membrane association is observed with certain cell types such as erythrocytes, osteoclasts, gastric parietal cells and renal proximal tubule cells. This enzyme is also found in the endoplasmic reticulum, Golgi complex and cytosolic compartments in various cell types. In addition to its intracellular localization, cathepsin E occurs in the culture medium of activated phagocytes and cancer cells as the catalytically active enzyme. Its strategic expression and localization thus suggests the association of this enzyme with specific biological functions of the individual cell types. Recent genetic and pharmacological studies have particularly suggested that cathepsin E plays an important role in host defense against cancer cells and invading microorganisms. This review focuses emerging roles of cathepsin E in immune system cells and skin keratinocytes, and in host defense against cancer cells. This article is part of a Special Issue entitled: Proteolysis 50 years after the discovery of lysosome.