Objective Obesity and its related chronic inflammation are the major risk factors for developing metabolic disturbances. The roles of cathepsin cysteine proteases have been tied to inflammation and atherosclerosis. Cathepsins are important functional links between inflammation, cholesterol metabolism, and atherosclerosis in obesity. NPC2, a lysosomal protein, plays an important role in cholesterol trafficking. The objective of this study was to examine the regulation of cathepsins and NPC2 in adipose tissue and macrophages in obesity and the effect of modifying cathepsin activity in cholesterol metabolism and trafficking in macrophages. Design and Methods Cathepsins and NPC2 mRNA expression and protein secretion were detected in obese adipose tissue as well as 3T3-L1 adipocytes and Raw 264.7 macrophages in response to inflammatory stimuli and cathepsin inhibitors. Results It was found that high-fat diet feeding altered the mRNA and protein expression levels of cathepsins B and L (CtB and CtL) and NPC2 in adipose tissue in mice; the differential regulation of these proteins was observed between adipose depots. In vitro studies showed that TNF-α reduces intracellular protein levels of CtB, CtL, and NPC2, but increases their secretion in 3T3-L1 adipocytes. Likewise, LPS stimulated the secretion of CtB and NPC2 in Raw 264.7 macrophages. Using the inhibitors of cathepsin enzymatic activity, it was found that CtB and CtL regulate TNF-α production, the expression and secretion of NPC2 protein, and the mRNA levels of the genes involved in cholesterol trafficking in macrophages. Conclusion These findings suggest that CtB and CtL have a significant involvement in mediating the inflammatory response, in cholesterol trafficking, and in regulating NPC2 secretion.