Advanced glycation end products (AGEs) are non-enzymatic post-translational modifications of amino acids and are associated with diabetic complications. One proposed pathomechanism is the impaired processing of AGE-modified proteins or peptides including prohormones. Two approaches were applied to investigate whether substrate modification with AGEs affects the processing of substrates like prohormones to the active hormones. First, we employed solid-phase peptide synthesis to generate unmodified as well as AGE-modified protease substrates. Activity of proteases towards these substrates was quantified. Second, we tested the effect of AGE-modified proinsulin on the processing to insulin. Proteases showed the expected activity towards the unmodified peptide substrates containing arginine or lysine at the C-terminal cleavage site. Indeed, modification with Nε-carboxymethyllysine (CML) or methylglyoxal-hydroimidazolone 1 (MG-H1) affected all proteases tested. Cysteine cathepsins displayed a reduction in activity by ∼50% towards CML and MG-H1 modified substrates. The specific proteases trypsin, proprotein convertases subtilisin-kexins (PCSKs) type proteases, and carboxypeptidase E (CPE) were completely inactive towards modified substrates. Proinsulin incubation with methylglyoxal at physiological concentrations for 24 h resulted in the formation of MG-modified proinsulin. The formation of insulin was reduced by up to 80% in a concentration-dependent manner. Here, we demonstrate the inhibitory effect of substrate-AGE modifications on proteases. The finding that PCSKs and CPE, which are essential for prohormone processing, are inactive towards modified substrates could point to a yet unrecognized pathomechanism resulting from AGE modification relevant for the etiopathogenesis of diabetes and the development of obesity.