Gasdermin C (GSDMC), predominantly expressed in the gut, belongs to the Gasdermin (Gsdm) protein family, which only becomes functional after the protease cleavage-mediated release of the N-terminus from their self-inhibited C-terminus. Previous studies have identified caspase 8 as the protease responsible for cleaving human GSDMC in specific cancer cell types, leading to pyroptosis, a form of programmed inflammatory cell death. However, the direct protease that cleaves intestinal GSDMC is unknown. Here, we showed that the protease Cathepsin S (CTSS) is the direct protease for GSDMC. Intriguingly, unlike other Gasdermin N-terminal fragments (GSDMs^N-ter), the CTSS-processed GSDMC^N-ter was found to be ineffective in promoting pyroptosis. This ineffectiveness is attributed to an incomplete lipid interaction motif, which limits its ability to disrupt cellular membranes—a hallmark of pyroptosis. Instead, CTSS-processed GSDMC^N-ter localized to and penetrated RAB7⁺ vesicles, which are considered the marker for late endosomes. Consequently, targeting of RAB7⁺ vesicles resulted in the release of endocytic cargo, resulting in enhanced protein production during plasmid transfection and an improved transfectability of cell lines. Furthermore, Rab7 associates with lipid droplets and regulates lysosome recruitment to lipid droplets. We found that CTSS-generated GSDMC^N-ter resulted in impaired lipid droplet breakdown and turnover under starvation conditions. This newly described biological function expands the role of Gsdm beyond pyroptosis and highlight a novel role for Gsdm proteins in modulating Rab7+ vesicles, such as late endosome/lipid droplet functions.