Activity and transcription profiles of two classes of cysteine proteases, papain- and legumain-like cysteine proteases, as well as their potential inhibitors, cysteine protease inhibitors (cystatins), were investigated in soybean nodules during nodule development and after drought inducing premature senescence. During nodule development total protease activity increased with major activity bands detected protease zymography in older nodules. Expressed cysteine proteases during nodule development were detected by tagging proteases with the cysteine protease inhibitor DCG-04 with major DCG-04 tagged bands found in both young and old nodules. Increase in protease activity was associated with a significant decrease in nitrogenase activity of nodules measured as acetylene reduction. Semi-quantitative RT-PCR for cysteine protease and cystatin transcription profiling showed a decrease in transcription during development and also after drought treatment of several papain-like cysteine proteases (Glyma04g04400, Glyma17g05670, Glyma10g35100, and Glyma04g03090). In contrast, transcription of three legumain-like cysteine proteases (Glyma17g14680, Glyma05g04230 and Glyma14g10620) increased during nodule development and also after drought treatment. Transcription of two cystatins (Glyma13g27980 and Glyma05g28250) increased during nodule development with Glyma13g27980 strongly up-regulated after drought treatment and Glyma05g28250 constitutively strongly expressed in both well-watered and drought treated nodules. Overall, the study has contributed in establishing an expression profile of cysteine proteases and cystatins in soybean nodules. This knowledge provides a basis which can be used to determine the importance of the individual components of the cysteine protease – cystatin system, during soybean nodule development and during stress-induced premature nodule senescence.