Serine and cysteine cathepsin (Cts) proteases are an important class of intracellular and pericellular enzymes mediating multiple aspects of tumor development. Emblematic of these is CtsB, reported to play functionally significant roles during pancreatic islet and mammary carcinogenesis. CtsC, on the other hand, while up-regulated during pancreatic islet carcinogenesis, lacks functional significance in mediating neoplastic progression in that organ. Given that protein expression and enzymatic activity of both CtsB and CtsC are increased in numerous tumors, we sought to understand how tissue specificity might factor into their functional significance. Thus, whereas others have reported that CtsB regulates metastasis of mammary carcinomas, we found that development of squamous carcinomas occurs independently of CtsB. In contrast to these findings, our studies found no significant role for CtsC during mammary carcinogenesis but revealed squamous carcinogenesis to be functionally dependent on CtsC. In this context, dermal/stromal fibroblasts and bone marrow-derived cells expressed increased levels of enzymatically active CtsC that regulated the complexity of infiltrating immune cells in neoplastic skin, development of angiogenic vasculature, and overt squamous cell carcinoma growth. These studies highlight the important contribution of tissue/microenvironment context to solid tumor development and indicate that tissue specificity defines functional significance for these two members of the cysteine protease family.