1. Washed cellular suspensions of pneumonic lungs, previously preserved with chloroform and toluene, contain a protease or proteolytic ferment, derived chiefly from the leucocytes of the exudate. 2. This protease is able to convert horse fibrin to a non-coagulable split product. In a pH range of 4.0 to 8.0 the digestion is slight at the most acid end. With decrease in acidity there is a gradual rise in activity to pH 6.0, and then a sharp increase up to the maximum digestion at pH 8.0. Judging from the amino nitrogen determinations, the most complete splitting occurs at pH 7.0. The degree of autolysis occurring in the pneumonic lung cellular suspension controls suggests that the active enzyme is identical with that causing the digestion of the fibrin. 3. Washed cellular suspensions of normal lungs, previously preserved with chloroform and toluene, contain a proteolytic enzyme which is active in a moderately acid medium (pH 4.0) and essentially inactive in less acid, neutral, and slightly alkaline media.