Proteolytic modification of circulating insulin-like growth factor binding protein-3 (IGFBP-3) has been described in a number of conditions. Using Western ligand blotting and SDS-PAGE analysis of fragmentation patterns of 125I-labelled IGFBP-3 and 125-labelled IGFBP-1, we have examined conditioned media from cultured human cell lines for the presence of proteolytic activity and compared this with the action of circulating proteases and with characterized enzymes including cathepsin D, kallikrein, plasmin and tissue plasminogen activator. 125I-Labelled IGFBP-3 was incubated with serum from pregnant women, patients following heart surgery and patients with cancer of the breast, lung or head/neck. Following separation of the preincubated samples by SDS-PAGE, a distinct pattern of degradation fragments was observed which was similar in all cases. This proteolytic activity was inhibited in the presence of EDTA, phenanthroline and 4(-2-aminoethyl)-benzenesulphonylfluoride, HCl. These proteases had no detectable effect on IGFBP-1. Serum-free conditioned medium from a human dermal fibroblast cell line, a rabdomyosarcoma, a cervical, a bladder, a chorio- and two-tongue squamous cell carcinoma cell lines all contained proteolytic activity which fragmented IGFBP-3. The pattern of fragments was similar in all cell lines but different from that produced by the circulating proteases. Six out of nine cell lines produced protease(s) which degraded IGFBP-1 in addition to IGFBP-3. Whilst all the characterized enzymes tested also fragmented IGFBP-3 and plasmin cleaved IGFBP-1, none of these acted in the same way as either circulating or cell line-derived proteolytic activity. The activity associated with the characterized enzymes and cell lines was inhibited in the presence of serum from normal healthy subjects. These results demonstrate that the serum of pregnant women, post-operative patients and patients with cancer contain circulating proteases which cause fragmentation of IGFBP-3 but have little effect on IGFBP-1. Cell-derived proteases were shown to act on IGFBP-3 and IGFBP-1 in a number of instances but are not active in the presence of circulating inhibitors. These proteases may play an important role in regulating the availability of IGFs to normal and neoplastic tissues.