Asparaginyl endopeptidase (AEP) is an endo/lysosomal cysteine endopeptidase with a preference for an asparagine in the P1 site and plays an important role in the maturation of TLR3/7/9. To perform the catalysis, AEP is known to undergo autoproteolytic maturation at acidic pH. Here, we described the crystal structures of the pro-enzyme and the mature forms of AEP solved at 2.00 and 2.80 Å resolutions, respectively. Pro-enzyme AEP was bi-modular, exhibiting an all α-helice cap domain that covered the active site located on the surface of an α/β hydrolase core domain. Structural comparisons between AEP and caspases revealed the similarities in the composition of key residues and catalytic mechanism of active AEP and caspases. During maturation, auto-proteolytic cleavage of the cap domain opened up access to the active site on core domain. Mutagenesis identified N44, R46, H150, C191, S217/S218 and D233 as residues essential for catalysis of the peptide substrate. Using 293T cells we confirmed that AEP N44 residue was critical for the activity of AEP. Surprisingly, there existed an auto-proteolytic maturation intermediate stage around pH 4.5 where the partially activated AEP could be re-ligated back to its proenzyme form. In addition, we showed, for the first time, that cystatin C regulated AEP’s activity by competing with other ligands for the active site.