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Neutrophils and macrophages produce, store and release large amounts of various acid and neutral proteinases. The two main proteinases of neutrophils are elastase and cathepsin G. They are localized in the azurophil granules, together with proteinase 3 and the acid cathepsins B and D. In addition neutrophils contain collagenase in the specific granules, acid proteinases in the C-particles and plasminogen activator in organelles with the characteristics of secretory vesicles. The granule-bound proteinases are released during phagocytosis while plasminogen activator is apparently secreted. In macrophages, the acid hydrolases are bound to lysosomes while the neutral proteinases are confined to secretory vesicles. The main mechanism of enzyme release in macrophages is secretion. Lysosomal hydrolases are also released by phagocytosis. Enzyme secretion is a characteristic property of activated or inflammatory macrophages. Macrophages become activated after phagocytosis of certain particles and the metabolic burst appears to be an initial event in the activation process. The action of neutrophils and of purified elastase or plasmin on cartilage was tested. These experiments indicate that neutrophil-mediated degradation of cartilage proteoglycans is largely dependent on elastase.