The fruit fly genome is characterized by an evolutionary expansion of proteases and immunity-related genes. In order to characterize the proteases that are active in a phagocytic Drosophila model cell line (S2 cells), we have applied a functional proteomics approach that allows simultaneous detection and identification of multiple protease species. DCG-04, a biotinylated, mechanism-based probe that covalently targets mammalian cysteine proteases of the papain family was found to detect Drosophila polypeptides in an activity-dependent manner. Chemical tagging combined with tandem mass spectrometry permitted retrieval and identification of these polypeptides. Among them was thiol-ester motif-containing protein (TEP) 4 which is involved in insect innate immunity and shares structural and functional similarities with the mammalian complement system factor C3 and the pan-protease inhibitor alpha2-macroglobulin. We also found four cysteine proteases with homologies to lysosomal cathepsin (CTS) L, K, B, and F, which have been implicated in mammalian adaptive immunity. The Drosophila CTS equivalents were most active at a pH of 4.5. This suggests that Drosophila CTS are, similar to their mammalian counterparts, predominantly active in lysosomal compartments. In support of this concept, we found CTS activity in phagosomes of Drosophila S2 cells. These results underscore the utility of activity profiling to address the functional role of insect proteases in immunity.