Cystatins (CSTs) are reversible and competitive inhibitors of C1A cysteine proteases, corresponding to papain-like cathepsins in plants and animals. A viral CST (CpBV-CST1) was identified from a polydnavirus, Cotesia plutellae bracovirus. Our previous study indicated that overexpression of CpBV-CST1 interfered with immune response and development of Plutella xylostella larvae. This study produced a recombinant CpBV-CST1 protein (rCpBV-CST1) using bacterial expression system to analyze its inhibitory activity against cysteine protease and physiological role in the parasitism of an endoparsitoid wasp, Cotesia plutellae. The open reading frame (ORF) of CpBV-CST1 encodes a polypeptide of 138 amino acids (15 kDa). rCpBV-cystatin protein in BL21 STAR (DE3) competent cells containing a recombinant pGEX4T-3:CpBV-CST1 was overexpressed by 0.5 mM IPTG for 4 h. In biological activity assay, partially purified GST-fused rCpBV-CST1 showed inhibitory activity against papain. It also inhibited larval development of P. xylostella in a dose-dependent manner. These results suggest that CpBV-CST1 plays a role in retardation of larval development of P. xylostella during parasitism.