The cysteine protease legumain typically localizes to the endolysosomal system, where it is an important player in the immune system. However, in the context of Alzheimer's disease (AD), legumain has been shown to be translocated to the cytosol, where it cleaves SET, synonymously termed TAF-1 or I2PP2A, an inhibitor of protein phosphatase 2A. SET is primarily found in the nucleus, where it regulates gene transcription, cell cycle progression, and histone acetylation, but can also translocate to the cytoplasm where it regulates cell migration and is implicated in neuronal apoptosis in AD. In this study, we demonstrate that legumain cleaves SET at two major sites: Asn16 at the N-terminal end and Asn175 at the earmuff domain. Contrary to previous findings, our biochemical and crystallographic experiments reveal that the corresponding N- and C-terminal cleavage products remain bound in a stable complex, rather than dissociating. Additionally, we show that the C-terminal acidic stretch of SET is essential for its binding to histone 1, and that cleavage impairs this interaction. Finally, we demonstrate that SET positively modulates PP2A activity. This effect is however abolished upon cleavage by legumain.