The serine protease hepsin is highly upregulated in prostate cancer and is implicated in tumor progression. Therefore, specific inhibition of hepsin enzymatic activity by an antibody constitutes an attractive therapeutic approach. Here, we report the identification of the anti-hepsin antibody Fab25 by screening of a Fab phage display library with a restricted chemical diversity at the complementary determining regions. Hepsin with its S1 pocket occupied by 3,4-dichloro-isocoumarin was used as the ‘bait’ for library screening. Fab25 was highly specific and it potently inhibited hepsin activity toward a panel of synthetic and macromolecular substrates. Biochemical and enzymatic studies with synthetic substrates of variable length suggested that Fab25 acts as an allosteric inhibitor based on non-competitive inhibition kinetics. Isothermal titration calorimetric experiments showed that the high-affinity (KD 6.1 nM) binding of Fab25 with hepsin is enthalpically driven. Despite an unusually long CDR-H3 loop with several potential hepsin cleavage sites (Lys, Arg residues), Fab25 was not processed by hepsin. Antibody-25 should be valuable for investigating hepsin's role in cancer progression and for potential therapeutic applications. Furthermore, the herein presented phage display strategy using an active site-modified protease should be widely applicable for identifying potential allosteric anti-protease antibodies.