Cathepsin B, purified from isolated islets of Langerhans, when incubated with proinsulin under in vitro conditions could convert proinsulin to insulin and C-peptide, releasing free arginine and lysine. When C-peptide, prepared from rat pancreas, was added to the incubation system consisting of proinsulin and cathepsin B, it completely inhibited the conversion of proinsulin to insulin.