Proteolytic cleavage at single sites in the extracellular calcium-binding module of BM-40/SPARC/osteonectin either by an unknown endogenous protease (L197-L198) or several matrix metalloproteinases (E196-L197) was previously shown to enhance collagen binding activity 10-fold. Polyclonal rabbit antibodies were now obtained against synthetic peptide antigens containing either an N-terminal L197 or L198 and characterized by radioimmunoassay, ELISA, immunoblots and immunohistology. These neoepitope-specific antibodies reacted with proteolytically processed but not with uncleaved mouse and human BM-40. The cross-reaction between the two different neoepitopes was < 1%, indicating the immunodominant role of the N-terminal residues. Analysis of a basement membrane producing mouse tumor demonstrated extensive cleavage at the L198 site, which correlated with a calcium-dependent binding to the matrix. A variable degree of this cleavage was also detected in BM-40 obtained from adult mouse bone and several other tissues. Negligible or much lower levels of conversion were detected at the MMP-specific L197 site, however. Immunogold staining of mouse heart and a basement membrane-producing mouse tumor showed a distinct extracellular labeling for BM-40 and the L198 neoepitope but only a very weak reaction for the L197 neoepitope. This strongly indicates that these neoepitopes are generated in vivo and emphasizes a specific biological role for the proteolytic activation of BM-40.