Increased expression of several osteoblastic proteases and MEPE (a bone matrix protein) occurs in X-linked hypophosphatemic rickets (hyp). This is associated with an increased release of a protease-resistant MEPE peptide (ASARM peptide), a potent inhibitor of mineralization. Cathepsin B cleaves MEPE releasing ASARM peptide and hyp osteoblast/osteocyte cells hypersecrete cathepsin D, an activator of cathepsin B. Our aims were to determine whether cathepsin inhibitors correct the mineralization defect in vivo and whether hyp-bone ASARM peptide levels are reduced after protease treatment. Normal littermates and hyp mice (n = 6) were injected intraperitoneally once a day for 4 weeks with pepstatin, CAO74 or vehicle. Animals were then sacrificed and bones plus serum removed for comprehensive analysis. All hyp mice groups (treated and untreated) remained hypophosphatemic with serum 1,25 vitamin D3 inappropriately normal. Serum PTH was significantly elevated in all hyp mice groups relative to normal mice (P = 0.0017). Untreated hyp mice had six-fold elevated levels of serum alkaline-phosphatase and two-fold elevated levels of ASARM peptides relative to normal mice (P < 0.001). In contrast, serum alkaline phosphatase and serum ASARM peptides were significantly reduced (normalized) in hyp mice treated with CA074 or pepstatin. Serum FGF23 levels remained high in all hyp animal groups (P < 0.0001). Hyp mice treated with protease inhibitors showed dramatic reductions in unmineralized osteoid (femurs) compared to control hyp mice (Goldner staining). Also, hyp animals treated with protease inhibitors showed marked and significant improvements in growth plate width (42%), osteoid thickness (40%) and cortical area (40%) (P < 0.002). The mineralization apposition rate, bone formation rate and mineralization surface were normalized by protease-treatment. High-resolution pQCT mineral histomorphometry measurements and uCT also confirmed a marked mineralization improvement. Finally, the growth plate and cortical bone of hyp femurs contained a massive accumulation of osteoblast-derived ASARM peptide(s) that was reduced in hyp animals treated with CA074 or pepstatin. This study confirms in vivo administration of cathepsin inhibitors improves bone mineralization in hyp mice. This may be due to a protease inhibitor mediated decrease in proteolytic degradation of the extracellular matrix and a reduced release of ASARM peptides (potent mineralization inhibitors).