SH-protease inhibitor was purified from newborn rat epidermis and its activity against cathepsins B and H compared using alpha-N-benzoyl-DL-arginine-2-napthylamide as a substrate. 2. Preincubation of the inhibitor with the enzymes at 37 degrees C resulted in increased inhibitor activity for cathepsin B but not for cathepsin H: pH 7.0 was more effective than the lower pH for the increase. 3. The inhibition was noncompetitive regardless of the preincubation conditions and the inhibition was greater for cathepsin H than cathepsin B. 4. These findings suggest that there is an SH-protease inhibitor of newborn rat epidermis which has different biological behavior against cathepsins B and H.