Abstract An SH-proteinase inhibitor (EPI) purified from newborn rat epidermis was shown to inhibit casein and BAPNA hydrolytic activities of rat liver extract in vitro . The greatest inhibition was seen in the cathepsin L fraction purified by CM Sephadex C-50. Fifty percent inhibition of 1 U cathepsin L and papain were seen with 325 μg and 50 μg EPI, respectively. Intradermal injection of cathepsin L in newborn rats caused inflammatory reactions and a reduction of EPI from living epidermal cells of the skin site. The findings suggest that EPI is excreted from the epidermal cells into the dermis where SH-proteinase activity is involved in the inflammatory process.