Angiostatin, a kringle-containing fragment of plasminogen, is a potent inhibitor of angiogenesis. The mechanism(s) responsible for the anti-angiogenic properties of angiostatin are unknown. We now report that human angiostatin blocks plasmin(ogen)-enhanced in vitro invasion of tissue plasminogen activator (t-PA)-producing endothelial and melanoma cells. Kinetic analyses demonstrated that angiostatin functions as a non-competitive inhibitor of extracellular-matrix (ECM)-enhanced, t-PA-catalysed plasminogen activation, with a Ki of 0.9+/-0.03 microM. This mechanism suggests that t-PA has a binding site for the inhibitor angiostatin, as well as for its substrate plasminogen that, when occupied, prevents ternary complex formation between t-PA, plasminogen and matrix protein. Direct binding experiments confirmed that angiostatin bound to t-PA with an apparent Kd [Kd(app)] of 6.7+/-0.7 nM, but did not bind with high affinity to ECM proteins. Together, these data suggest that angiostatin in the cellular micro-environment can inhibit matrix-enhanced plasminogen activation, resulting in reduced invasive activity, and suggest a biochemical mechanism whereby angiostatin-mediated regulation of plasmin formation could influence cellular migration and invasion.