Methods and compositions are provided for modulating the activity of macrophage and macrophage-like cells, particularly by modulating the peptidase activity of such cells. In certain aspects, methods are provided for enhancing or suppressing the immune function of a host by increasing or decreasing, respectively, expression of a target peptidase in host macrophage and macrophage-like cells. Such methods for enhancing or suppressing the immune function of a host by increasing or inhibiting (suppressing or silencing) expression of a target peptidase in host macrophage and macrophage-like cells find use in methods for treating and/or preventing a number of diseases and conditions, including cancer, viral and/or bacterial infection, Alzheimer's disease, tissue transplant rejection, autoimmune diseases, and chronic inflammatory diseases. The invention also provides compositions and research tools related to these methods, including vectors for increasing or inhibiting the expression of a peptidase in macrophage and macrophage-like cells, macrophage and macrophage-like cells transfected with these vectors, genetically modified mice that over-express a target peptidase or in which expression of a target peptidase has been disrupted, and selective modulators of peptidase activity in macrophages as well as methods for identifying and using such modulators.