The lysosomal cysteine protease cathepsin S supports host defence by promoting the maturation of MHC class-II proteins. In contrast, increased cathepsin S activity mediates tissue destructive immune responses in autoimmune and inflammatory diseases. Therefore, cathepsin S is a key target in drug discovery programs. Here, we critically reviewed the specific mechanisms by which cathepsin S mediates autoimmune and hyperinflammatory responses to identify new targets for therapeutic immunomodulation. To this end, we performed literature review utilizing PubMed, drug database of US FDA, European Medicines Agency and the Drug-Gene Interaction Database. Cathepsin S destroys T cell epitopes and reduces endogenous antigen diversity, impairing negative selection of autoreactive T cells that could recognize these epitopes. Moreover, cathepsin S critically regulates inflammatory disease severity by generating proinflammatory molecules (PAR-1, PAR-2, IL-36γ, Fractalkine, Endostatin, Ephrin-B2), inactivating anti-inflammatory mediators (SLPI) and degrading molecules involved in antimicrobial and immunomodulatory responses (surfactant protein-A, LL-37, beta-defensins), inter-endothelial/-epithelial barrier function, gene repair and energy homeostasis. These pathways could be targeted by repositioning of existing drugs. These findings suggest that inhibiting cathepsin S or a specific downstream target of cathepsin S by repositioning of existing drugs could be a promising strategy for treating autoimmune and inflammatory diseases. Current cathepsin S inhibitors in clinical trials face challenges, highlighting the need for innovative inhibitors that function effectively in various cellular compartments with differing pH levels, without targeting the shared catalytic site of cysteine cathepsins.