The ability to produce large quantities of recombinant Adeno-Associated Virus (rAAV) vectors is an important factor for the development of gene therapy-based medicine. The baculovirus/insect cell expression system is one of the major systems for large scale rAAV production. So far, most technological developments concerned the optimization of the AAV rep and cap genes in order to be expressed correctly in a heterologous system. However, the effect of the baculovirus infection on the production of rAAV has not been examined in detail. In this study we show that the baculoviral cathepsin (v-CATH) protease is active on several (but not all) rAAV serotypes, leading to a partial degradation of VP1/VP2 proteins. Subsequently, we identified the principal v-CATH cleavage site in the rAAV8 capsid proteins and demonstrated that the cleavage is highly specific. The proteolytic degradation of VP1/ VP2 AAV capsid proteins reduces the infectivity of rAAV vectors but can be prevented by the use of a baculovirus vector with a deletion of the chiA/v-cath locus or by addition of the E64 protease inhibitor during production. Moreover, the codon optimization of AAV cap performed for several serotypes and originally aimed at the removal of potential alternative initiation codons, resulted in incorporation of additional forms of truncated VP1 into the rAAV capsids.