Early embryonic loss, caused by reduced embryo developmental competence, is the major cause of subfertility in humans and animals. This embryo developmental competence is determined during oocyte maturation and the first embryo divisions. Therefore, it is essential to identify the underlying molecules regulating these critical developmental stages. Cathepsin L (CTSL), a lysosomal cysteine protease, is involved in regulating cell cycle progression, proliferation and invasion of different cell types. However, CTSL role in mammalian embryo development is unknown. Using bovine in vitro maturation and culture systems, we show that CTSL is a key regulator for embryo developmental competence. We employed a specific CTSL detection assay in live cells to show that CTSL activity correlates with meiotic progression and early embryo development. Inhibiting CTSL activity during oocyte maturation or early embryo development significantly impaired oocyte and embryo developmental competence as evidenced by lower cleavage, blastocyst and hatched blastocyst rates. Moreover, enhancing CTSL activity, using recombinant CTSL (rCTSL), during oocyte maturation or early embryo development significantly improved oocyte and embryo developmental competence. Importantly, rCTSL supplementation during oocyte maturation and early embryo development significantly improved the developmental competence of heat‐shocked oocytes/embryos which are notoriously known for reduced quality. Altogether, these results provide novel evidence that CTSL plays a pivotal role in regulating oocyte meiosis and early embryonic development.