Cathepsin C (CatC) is a dipeptidyl-exopeptidase which activates neutrophil serine protease precursors (elastase, proteinase 3, cathepsin G and NSP4) by removing their N-terminal propeptide in bone marrow cells at the promyelocytic stage of neutrophil differentiation. The resulting active proteases are implicated in chronic inflammatory and autoimmune diseases. Hence, inhibition of CatC represents a therapeutic strategy to suppress excessive protease activities in various neutrophil mediated diseases. We designed and synthesized a series of dipeptidyl cyclopropyl nitrile compounds as putative CatC inhibitors. One compound, IcatCXPZ-01 ((S)-2-amino-N-((1R,2R)-1-cyano-2-(4'-(4-methylpiperazin-1-ylsulfonyl)biphenyl-4-yl)cyclopropyl)butanamide)) was identified as a potent inhibitor of both human and rodent CatC. In mice, pharmacokinetic studies revealed that IcatCXPZ-01 accumulated in the bone marrow reaching levels suitable for CatC inhibition. Subcutaneous administration of IcatCXPZ-01 in a monoclonal anti-collagen antibody induced mouse model of rheumatoid arthritis resulted in statistically significant anti-arthritic activity with persistent decrease in arthritis scores and paw thickness.