Transmembrane protease, serine 2 (TMPRSS2) has been identified as key host cell factor for viral entry and pathogenesis of SARS-CoV-2. Specifically, TMPRSS2 proteolytically processes the SARS-CoV-2 Spike (S) protein, enabling virus-host membrane fusion and infection of the airways. We present here a recombinant production strategy for enzymatically active TMPRSS2 and characterization of its matured proteolytic activity, as well as its 1.95 Å X-ray cocrystal structure with the synthetic protease inhibitor nafamostat. Our study provides a structural basis for the potent but nonspecific inhibition by nafamostat and identifies distinguishing features of the TMPRSS2 substrate binding pocket that explain specificity. TMPRSS2 cleaved SARS-CoV-2 S protein at multiple sites, including the canonical S1/S2 cleavage site. We ranked the potency of clinical protease inhibitors with half-maximal inhibitory concentrations ranging from 1.4 nM to 120 µM and determined inhibitor mechanisms of action, providing the groundwork for drug development efforts to selectively inhibit TMPRSS2.