The lysosomal protease cathepsin L has been reported to cleave various functionally important cytosolic or nuclear proteins. To explain nucleo-cytosolic localization of cathepsin L, it has been hypothesized that skipping of the first start codon during translation initiation results in an N-terminally truncated protein lacking the endoplasmic reticulum-import signal. Here we demonstrate that out-of-frame AUGs prevent translation of truncated cathepsin L in cell culture as well as in a new knock-in mouse model. We further evaluate potential roles of nuclear cathepsin L during early embryonic development. Our analysis reveals normal epiblast development of cathepsin L-deficient embryos, but uncovers a pronounced lysosomal storage phenotype in the extra-embryonic tissue of the visceral endoderm. In conclusion, the phenotypes of cathepsin L deficiency can be fully assigned to lack of canonically targeted cathepsin L, while the biogenesis and functionality of nucleo-cytosolic cathepsin L remain elusive.