Cathepsin L (CTSL) plays physiological and pathological roles in immune responses, cancer, metamorphosis, and oogenesis in several species. However, the function of Ctsl in medaka ovaries remains unclear. Therefore, here, we examined the physiological functions of Ctsl in the medaka ovaries. Ctsl mRNA transcripts and proteins were found to be constitutively expressed in the ovaries of Oryzias latipes over a 24-h spawning cycle. Expression was localized within the oocyte cytoplasm of growing follicles and the follicle layer of preovulatory and postovulatory follicles. Moreover, the active form of Ctsl was highly expressed in the follicle layer of periovulatory follicles and the ovaries 2–6 h after ovulation. Recombinant Ctsl (rCtsl) was activated under acidic conditions and exhibited enzymatic activity in acidic and neutral pH conditions. However, extracellular matrix (ECM) proteins were degraded by rCtsl under acidic, not neutral pH conditions. Ctsl was secreted from preovulatory follicles, while active rCtsl was detected in the conditioned medium of a medaka cell line, OLHNI-2. Mechanistically, rCtsl activates recombinant urokinase-type plasminogen activator-1 (Plau1), which is expressed within the follicle layers post-ovulation. Meanwhile, the treatment of medakas with an E-64 or anti-Ctsl antibody effectively blocked follicular layer degeneration and degradation after ovulation, whereas in vitro ovulation was not inhibited by either. Collectively, the findings of this study indicate that although Ctsl does not impact ovulation in medakas, it contributes to the degeneration and degradation of the follicle layers following ovulation via activation of Plau1, and not via the degradation of ECM proteins.