Cysteine protease that plays a key role in cytoplasm to vacuole transport (Cvt) and autophagy by mediating both proteolytic activation and delipidation of ATG8. Required for selective autophagic degradation of the nucleus (nucleophagy) as well as for mitophagy which contributes to regulate mitochondrial quantity and quality by eliminating the mitochondria to a basal level to fulfill cellular energy requirements and preventing excess ROS production. The protease activity is required for proteolytic activation of ATG8: cleaves the C-terminal amino acid of ATG8 to reveal a C-terminal glycine. ATG8 ubiquitin-like activity requires the exposure of the glycine at the C-terminus for its conjugation to phosphatidylethanolamine (PE) and its insertion to membranes, which is necessary for autophagy. The ATG8-PE conjugate mediates tethering between adjacent membranes and stimulates membrane hemifusion, leading to expansion of the autophagosomal membrane during autophagy. In addition to the protease activity, also catalyzes deconjugation of PE-conjugated forms of ATG8 during macroautophagy: ATG8 delipidation is required to release the protein from membranes, which facilitates multiple events during macroautophagy, and especially for efficient autophagosome biogenesis, the assembly of ATG9-containing tubulovesicular clusters into phagophores/autophagosomes, and for the disassembly of PAS-associated ATG components. ATG8 delipidation by ATG4 also recycles ATG8-PE generated on inappropriate membranes to maintain a reservoir of unlipidated ATG8 that is required for autophagosome formation at the PAS (By similarity). Autophagy is required for proper vegetative growth, asexual/sexual reproduction, and full virulence (PubMed:28894236). Autophagy is particularly involved in the biosynthesis of deoxynivalenol (DON), an important virulence determinant (PubMed:28894236). [protein]-C-terminal L-amino acid-glycyl-phosphatidylethanolamide + H2O = [protein]-C-terminal L-amino acid-glycine + a 1,2-diacyl-sn-glycero-3-phosphoethanolamine Interacts with ATG8 (By similarity). Significantly decreases the radial growth of colonies under nutrient-rich conditions (PubMed:28894236). Reduces strongly the production of deoxynivalenol (DON), an important virulence determinant (PubMed:28894236). Belongs to the peptidase C54 family.