MENT (Myeloid and Erythroid Nuclear Termination stage-specific protein) is a developmentally regulated chromosomal serpin that condenses chromatin in terminally differentiated avian blood cells. We show that MENT is an effective inhibitor of the papain-like cysteine proteinases cathepsins L and V. In addition, ectopic expression of MENT in mammalian cells is apparently sufficient to inhibit a nuclear papain-like cysteine proteinase and prevent degradation of the retinoblastoma protein, a major regulator of cell proliferation. MENT also accumulates in the nucleus, causes a strong block in proliferation, and promotes condensation of chromatin. Variants of MENT with mutations or deletions within the M-loop, which contains a nuclear localization signal and an AT-hook motif, reveal that this region mediates nuclear transport and morphological changes associated with chromatin condensation. Non-inhibitory mutants of MENT were constructed to determine whether its inhibitory activity has a role in blocking proliferation. These mutations changed the mode of association with chromatin and relieved the block in proliferation, without preventing transport to the nucleus. We conclude that the repressive effect of MENT on chromatin is mediated by its direct interaction with a nuclear protein that has a papain-like cysteine proteinase active site.