In many organisms, sophisticated mechanisms facilitate release of peptides in response to extracellular stimuli. In the ciliate Tetrahymena thermophila, efficient peptide secretion depends on specialized vesicles called mucocysts that contain dense crystalline cores that expand rapidly during exocytosis. Core assembly depends of endoproteolytic cleavage of mucocyst proproteins by an aspartyl protease, cathepsin 3 (CTH3). Here, we show that a second enzyme identified by expression profiling, Cth4p, is also required for processing of proGrl proteins and for assembly of functional mucocysts. Cth4p is a cysteine cathepsin that localizes partially to endolysosomal structures and appears to act downstream of, and may be activated by, Cth3p. Disruption of CTH4 results in cells (Δcth4) that show aberrant trimming of Grl proproteins, as well as grossly aberrant mucocyst exocytosis. Surprisingly, Δcth4 cells succeed in assembling crystalline mucocyst cores. However, those cores do not undergo normal directional expansion during exocytosis, and they thus fail to efficiently extrude from the cells. We could phenocopy the Δcth4 defects by mutating conserved catalytic residues, indicating that the in vivo function of Cth4p is enzymatic. Our results indicate that as for canonical proteins packaged in animal secretory granules, the maturation of mucocyst proproteins involves sequential processing steps. The Δcth4 defects uncouple, in an unanticipated way, the assembly of mucocyst cores and their subsequent expansion and thereby reveal a previously unsuspected aspect of polypeptide secretion in ciliates.