Thyroid function depends on processing of the prohormone thyroglobulin by sequential proteolytic events. From in vitro analysis it is known that cysteine proteinases mediate proteolytic processing of thyroglobulin. Here, we have analyzed mice with deficiencies in cathepsins B, K, L, B and K, or K and L in order to investigate which of the cysteine proteinases is most important for proteolytic processing of thyroglobulin in vivo. Immunolabeling demonstrated a rearrangement of the endocytic system and a redistribution of extracellularly located enzymes in thyroids of cathepsin-deficient mice. Cathepsin L was upregulated in thyroids of cathepsin K(-/-) or B(-/-)/K(-/-) mice, suggesting a compensation of cathepsin L for cathepsin K deficiency. Impaired proteolysis resulted in the persistence of thyroglobulin in the thyroids of mice with deficiencies in cathepsin B or L. The typical multilayered appearance of extracellularly stored thyroglobulin was retained in cathepsin K(-/-) mice only. These results suggest that cathepsins B and L are involved in the solubilization of thyroglobulin from its covalently cross-linked storage form. Cathepsin K(-/-)/L(-/-) mice had significantly reduced levels of free thyroxine, indicating that utilization of luminal thyroglobulin for thyroxine liberation is mediated by a combinatory action of cathepsins K and L.