MCoTI-II is a head-to-tail cyclic peptide with potent trypsin inhibitory activity and due to its proteolytic and chemical stability is a valuable template for the design of novel drug leads. Insights into dynamics and interactions with biological targets are critical for drug design studies, particularly for other protease targets. We show here that the cyclization and active site loops have flexibility in solution, but when bound to trypsin the active site loop displays a single well-defined conformation and the cyclic backbone maximizes favorable interactions with trypsin. We have subsequently used this scaffold to design potent inhibitors of matriptase, a type II transmembrane serine protease that is a key activator of multiple signaling pathways associated with cell proliferation and modification of the extracellular matrix. Deregulated matriptase activity correlates with a number of diseases, including cancer and hence highly selective matriptase inhibitors may have therapeutic potential. Based on structure activity data we have designed one of the most potent matriptase inhibitors with a 290 pM equilibrium dissociation constant, and provided an indication on how to modulate affinity for matriptase over trypsin in cyclic peptides. This information might be useful for the design of more selective and therapeutically relevant inhibitors of matriptase.