Thyroglobulin, the precursor of thyroid hormones, is extracellularly stored in a highly condensed and covalently cross-linked form. Solublization of thyroglobulin is facilitated by cysteine proteinases like cathepsins B and K which are proteolytically active at the surface of thyroid epithelial cells. The cysteine proteinases mediate the processing of thyroglobulin by limited extracellular proteolysis at the apical plasma membrane, thereby rapidly liberating thyroxine. The trafficking of cysteine proteinases in thyroid epithelial cells includes their targeting to lysosomes where they become maturated before being transported to the apical plasma membrane and, thus, into the extracellular follicle lumen. We propose that thyroid stimulating hormone regulates extracellular proteolysis of thyroglobulin in that it enhances the rate of exocytosis of lysosomal proteins at the apical plasma membrane. Later, thyroid stimulating hormone upregulates thyroglobulin synthesis and its secretion into the follicle lumen for subsequent compaction by covalent cross-linking. Hence, cycles of thyroglobulin proteolysis and thyroglobulin deposition might result in the regulation of the size of the luminal content of thyroid follicles. We conclude that the biological significance of extracellularly acting cysteine proteinases of the thyroid is the rapid utilization of thyroglobulin for the maintenance of constant thyroid hormone levels in vertebrate organisms.