A cell based assay for detection for protease activity is disclosed. In the assay a cell is engineered to express a protease substrate with at least one label, preferably on its C-terminus. Cleavage of the substrate by the protease that recognizes it results in a C-terminal fragment and a N-terminal fragment, where the fragment having the label is subject to ubiquitin proteasome degradation. The assay measures the disappearance of the label due to degradation of the fragment to which it is attached. A cell free assay is also described for detection of protease activity. In the cell free assay, the protease substrate is expressed in a solution that includes the elements of the ubiquitin proteasome pathway for degradation of the fragment. The assay measures the disappearance of the label attached to the fragment that results from cleavage by the protease.