Autophagy is an evolutionarily conserved pathway in which the cytoplasm and organelles are engulfed within double-membrane vesicles, termed autophagosomes, for the turnover and recycling of these cellular constituents. The yeast Atg8 and its human orthologs, such as LC3 and GABARAP, have a unique feature as they conjugate covalently to phospholipids, differing from ubiquitin and other ubiquitin-like modifiers that attach only to protein substrates. The lipidated Atg8 and LC3 localize to autophagosomal membranes and play indispensable roles for maturation of autophagosomes. Upon completion of autophagosome formation, some populations of lipidated Atg8 and LC3 are delipidated for recycling. Atg4b, a specific protease for LC3 and GABARAP, catalyzes the processing reaction of LC3 and GABARAP precursors to mature forms and de-conjugating reaction of the modifiers from phospholipids. Atg4b is a unique enzyme whose primary structure differs from that of any other proteases that function as processing and/or de-conjugating enzymes of ubiquitin and ubiquitin-like modifiers. However, the tertiary structures of the substrates considerably resemble that of ubiquitin except for the N-terminal additional domain. Here we determined the crystal structure of human Atg4b by X-ray crystallography at 2.0Å resolution, and show that Atg4b is a cysteine protease whose active catalytic triad site consists of Cys74, His280 and Asp278. The structure is comprised of a left lobe and a small right lobe, designated the “protease domain” and the “auxiliary domain”, respectively. Whereas the protease domain structure of Atg4b matches that of papain superfamily cysteine proteinases, the auxiliary domain contains a unique structure with yet-unknown function. We propose that the R229 and W142 residues in Atg4b are specifically essential for recognition of substrates and catalysis of both precursor processing and de-conjugation of phospholipids.