Drosophila melanogaster crammer is a novel cathepsin inhibitor that is involved in LTM (long-term memory) formation. The mechanism by which the inhibitory activity is regulated remains unclear. In the present paper we have shown that the oligomeric state of crammer is pH dependent. At neutral pH, crammer is predominantly dimeric in vitro as a result of disulfide bond formation, and is monomeric at acidic pH. Our inhibition assay shows that monomeric crammer, not disulfide-bonded dimer, is a strong competitive inhibitor of cathepsin L. Crammer is a monomeric molten globule in acidic solution, a condition that is similar to the environment in the lysosome where crammer is probably located. Upon binding to cathepsin L, however, crammer undergoes a molten globule-to-ordered structural transition. Using high-resolution NMR spectroscopy, we have shown that a cysteine-to-serine point mutation at position 72 (C72S) renders crammer monomeric at pH 6.0 and that the structure of the C72S variant highly resembles that of wild-type crammer in complex with cathepsin L at pH 4.0. We have determined the first solution structure of propeptide-like protease inhibitor in its active form and examined in detail using a variety of spectroscopic methods the folding properties of crammer in order to delineate its biomolecular recognition of cathepsin.