The diagnostic and prognostic significance of cathepsin B (CTSB) and L (CTSL) is well documented for solid tumors. However, their significance in acute leukemias is lacking. This study was planned to investigate expression and significance of these proteases in peripheral blood mononuclear cells (PBMCs) of patients with pediatric acute myeloid leukemia (AML). CTSL and CTSB activities were assayed in PBMCs of 24 children with AML and ten healthy controls by spectrofluorimetry. The mRNA levels of these proteases and their specific endogenous inhibitor cystatin C and transcriptional upregulator vascular endothelial growth factor (VEGF) were quantitated by real-time PCR. Correlation analysis of CTSL and CTSB activities/expression with their inhibitor/upregulator and event-free survival (EFS) was done using appropriate statistical tools. CTSL and CTSB protease activity and their mRNA expression were significantly higher in AML patients compared to controls (p ≤ 0.001). A strong positive correlation was observed between VEGF expression and CTSL (r = 0.812; p ≤ 0.001). Similarly, VEGF exhibited a strong positive correlation with CTSB (r = 0.501; p = 0.013). Cystatin expression though significantly high (p ≤ 0.001) in AML was negatively correlated with CTSL (r = -0.920; p ≤ 0.001) and CTSB (r = -0.580, p ≤ 0.001) expression. AML patients with higher CTSL and CTSB activity exhibited an inferior EFS (CTSL: p = 0.045; CTSB: p = 0.002) and overall survival (OS; CTSL: p = 0.05; CTSB: p = 0.004) compared to patients with lower levels of these proteases. This is the first report demonstrating increased expression of CTSL and CTSB in AML, mechanism of their increased expression in relation to VEGF, and their association with poor EFS and OS. These results suggest a potential utility of these proteases as prognostic markers for this malignancy.