Asparaginyl endopeptidase (AEP)/legumain, an asparagine-specific cysteine proteinase in animals, is an ortholog of plant vacuolar processing enzyme (VPE), which processes the exposed asparagine residues of various vacuolar proteins. In search for its physiological role in mammals, here we generated and characterized AEP-deficient mice. Although their body weights were significantly reduced, they were normally born and fertile. In the wild-type kidney where the expression of AEP was exceedingly high among various organs, the localization of AEP was mainly found in the lamp-2-positive late endosomes in the apical region of the proximal tubule cells. In these cells of AEP-deficient mice, the lamp-2-positive membrane structures were found to be greatly enlarged. These aberrant lysosomes, merged with the late endosomes, accumulated electron-dense and membranous materials. Furthermore, the processing of the lysosomal proteases, cathepsins B, H, and L, from the single-chain forms into the two-chain forms was completely defected in the deficient mice. Thus, the AEP deficiency caused the accumulation of macromolecules in the lysosomes, highlighting a pivotal role of AEP in the endosomal/lysosomal degradation system.