The specific accumulation of a hydrophobic protein, subunit c of ATP synthase, in lysosomes from the cells of patients with the late infantile form of NCL (LINCL) is caused by a defect in the CLN2 gene product, tripeptidyl peptidase I (TPP-I). The data here show that TPP-I is involved in the initial degradation of subunit c in lysosomes and suggest that its absence leads directly to the lysosomal accumulation of subunit c. The inclusion of a specific inhibitor of TPP-I Ala-Ala-Phe-chloromethylketone (AAF-CMK) in the culture medium of normal fibroblasts induced the lysosomal accumulation of subunit c. In an in vitro incubation experiment the addition of AAF-CMK to mitochondrial-lysosomal fractions from normal cells inhibited the proteolysis of subunit c, but not the β-subunit of ATP synthase. The use of two antibodies that recognize the aminoterminal and the middle portion of subunit c revealed that the subunit underwent aminoterminal proteolysis, when TPP-I, purified from rat spleen, was added to the mitochondrial fractions. The addition of both purified Tpp-I and the soluble lysosomal fractions, which contain various proteinases, to the mitochondrial fractions resulted in rapid degradation of the entire molecule of subunit c, whereas the degradation of subunit c was markedly delayed through the specific inhibition of TPP-I in lysosomal extracts by AAF-CMK. The stable subunit c in the mitochondrial-lysosomal fractions from cells of a patient with LINCL was degraded on incubation with purified TPP-I The presence of TPP-I led to the sequential cleavage of tripeptides from the N-terminus of the peptide corresponding to the amino terminal sequence of subunit c.