The ubiquitin-proteasome pathway is the principal one for intracellular protein turnover in eukaryotic cells. This pathway is involved in many biological processes, including degradation of damaged, oxidized, or misfolded proteins. Likewise, by this pathway, processing or degradation occurs of regulatory proteins such as cyclins, cyclin-dependent kinase inhibitors (e.g., p21 and p27), tumor suppressors (e.g., p53), and 1κB, which are critical in tumor growth and inflammation. Proteasome inhibitors might be useful for the treatment of cancer and inflammatory diseases. Tyropeptins A and B, new proteasome inhibitors, were isolated from the culture broth of Kitasatospora sp. MK993-dF2. They were purified using ethyl acetate extraction, silica gel column chromatography, Sephadex LH-20 column chromatography and HPLC. The ^1H and ^<13>C NMR of tyropeptins were complicated due to the presence of an aldehyde group. Therefore, to give assignable NMR spectra, tyropeptins were converted to their alcohols by sodium borohydride. The stereochemistry of tyropeptins were determined by analysis of acid hydrolysis products from tyropeptins, and further confirmed by the total synthesis. The structures of tyropeptins A and B were found to be isovaleryl-L-tyrosyl-L-valyl-DL-tyrosinal and n-butyryl-L-tyrosyl-L-leucyl-DL-tyrosinal, respectively. Tyropeptin A inhibits the chymotrypsin-like and trypsin-like activities of 20S proteasome with IC_<50> values of 0.1μg/ml and 1.5μg/ml respectively, but did not inhibit the peptidylglutamyl-peptide hydrolyzing (PGPH) activity of 20S proteasome at a concentration of 100μg/ml. And it inhibits the intracellular proteasome activity in PC-12 cell, and causes neurite outgrowth. As expected, ubiquitinated proteins accumulated in cells treated with tyropeptin A. Hence, it appears that tyropeptin A can permeate into cells, and then inhibits the intracellular proteasome activity. To enhance the tyropeptin A potency, we constructed a structural model of tyropeptin A bound to the site responsible for the chymotrypsin-like activity of the 20S proteasome. The obtained model nicely made fit into the site. On the basis of modeling experiment, several derivatives of tyropeptin A having the bulky N-terminal moiety were designed and synthesized. The most potent compound exhibited about 20-fold enhancement in potency compared to tyropeptin A.