Transforming growth factor-beta (TGF-β), a multifunctional cytokine regulating several immunologic processes, is expressed by virtually all cells as a biologically inactive molecule termed latent TGF-β (LTGF-β). We have previously shown that TGF-β activity increases during influenza virus infection in mice and suggested that the neuraminidase (NA) protein mediates this activation. In the current study, we determined the mechanism of activation of LTGF-β by NA from the influenza virus A/Gray Teal/Australia/2/1979 by mobility shift and enzyme inhibition assays. We also investigated whether exogenous TGF-β administered via a replication-deficient adenovirus vector provides protection from H5N1 influenza pathogenesis and whether depletion of TGF-β during virus infection increases morbidity in mice. We found that both the influenza and bacterial NA activate LTGF-β by removing sialic acid motifs from LTGF-β, each NA being specific for the sialic acid linkages cleaved. Further, NA likely activates LTGF-β primarily via its enzymatic activity, but proteases might also play a role in this process. Several influenza A virus subtypes (H1N1, H1N2, H3N2, H5N9, H6N1, and H7N3) except the highly pathogenic H5N1 strains activated LTGF-β in vitro and in vivo. Addition of exogenous TGF-β to H5N1 influenza virus-infected mice delayed mortality and reduced viral titers whereas neutralization of TGF-β during H5N1 and pandemic 2009 H1N1 infection increased morbidity. Together, these data show that microbe-associated NAs can directly activate LTGF-β and that TGF-β plays a pivotal role protecting the host from influenza pathogenesis.