Protease activity in inflammation is complex. Proteases released by cells in response to infection, cytokines, or environmental triggers like cigarette smoking cause breakdown of the extracellular matrix (ECM). In chronic inflammatory diseases like chronic obstructive pulmonary disease (COPD), current findings indicate that pathology and morbidity are driven by dysregulation of protease activity, either through hyperactivity of proteases or deficiency or dysfunction their antiprotease regulators. Animal studies demonstrate the accuracy of this hypothesis through genetic and pharmacologic tools. New work shows that ECM destruction generates peptide fragments active on leukocytes via neutrophil or macrophage chemotaxis towards collagen and elastin derived peptides respectively. Such fragments now have been isolated and characterized in vivo in each case. Collectively, this describes a biochemical circuit in which protease activity leads to activation of local immunocytes, which in turn release cytokines and more proteases, leading to further leukocyte infiltration and cyclical disease progression that is chronic. This circuit concept is well known, and is intrinsic to the protease–antiprotease hypothesis; recently analytic techniques have become sensitive enough to establish fundamental mechanisms of this hypothesis, and basic and clinical data now implicate protease activity and peptide signaling as pathologically significant pharmacologic targets. This review discusses targeting protease activity for chronic inflammatory disease with special attention to COPD, covering important basic and clinical findings in the field; novel therapeutic strategies in animal or human studies; and a perspective on the successes and failures of agents with a focus on clinical potential in human disease.