Accumulating data suggest a role for the lysosomal protease cathepsin S (CTSS) in type 1 diabetes. Circulating CTSS is increased in type 1 diabetes; however, whether CTSS has protective or deleterious effects is unclear. The study's objectives were to examine the biomarker potential of CTSS in new-onset type 1 diabetes, and to investigate the expression and secretion of CTSS in human islets and β cells. The CTSS level was analyzed in serum from children with new-onset type 1 diabetes and autoantibody-positive and -negative siblings by ELISA. The expression and secretion of CTSS were evaluated in isolated human islets and EndoC-βH5 cells by real-time qPCR, immunoblotting, and ELISA. The CTSS serum level was elevated in children with new-onset type 1 diabetes and positively associated with autoantibody status in healthy siblings. Human islets and EndoC-βH5 cells demonstrated induction and secretion of CTSS after exposure to pro-inflammatory cytokines, a model system of islet inflammation. Analysis of publicly available single-cell RNA sequencing data on human islets showed that elevated CTSS expression was exclusive for the β cells in donors with type 1 diabetes as compared to non-diabetic donors. These findings suggest a potential of CTSS as a diagnostic biomarker in type 1 diabetes.