The insulin-like growth factor (IGF) system has been implicated in the development of experimental diabetic nephropathy. IGF-binding protein-3 (IGFBP-3) modulates IGF actions, and proteolysis decreases its binding affinity for IGFs. The aim of this study was to explore the possibility that proteolysis of IGFBP-3 may be altered in diabetic nephropathy and may therefore modify the intrarenal effects of IGFs. IGFBP-3 proteolysis in urine from diabetic patients with normo- [albumin excretion rate (AER), <20 microg/min], micro- (AER, 20-200 microg/min), and macroalbuminuria (AER, >200 microg/min) was studied in 34 patients with noninsulin-dependent diabetes mellitus (NIDDM), 14 patients with insulin-dependent diabetes mellitus, and 9 controls. Urine samples were analyzed by Western ligand blotting and IGFBP-3 immunoblotting. Protease activity was quantitated using [125I]IGFBP-3 as a substrate. WLB showed three main bands (40-46, 35, and 26 kDa) in control urine and a fainter 18-kDa band. All but the 35-kDa band were immunoreactive with the IGFBP-3 antiserum. The same pattern of IGFBPs was seen in urine from normoalbuminuric diabetic patients. However, the urine of diabetic patients with micro- and macroalbuminuria contained little or no intact 40- to 46-kDa IGFBP-3. In patients with noninsulin-dependent diabetes mellitus, urinary IGFBP-3 protease activity in micro- (n = 13) and macroalbuminuric patients (n = 12; mean +/- SD[SCAP], 75 +/- 25% and 84 +/- 24%) was significantly higher than that in normoalbuminuric patients (29 +/- 9%; P = 0.0001). Similar results were observed in patients with insulin-dependent diabetes mellitus. Proteolytic activity in diabetic urine was due to a serine protease. In conclusion, diabetic nephropathy was associated with IGFBP-3 proteolysis in urine. As similar changes were not observed in patients' sera, this is likely to reflect changes in the kidney or urinary tract, resulting in increased local IGF bioavailability, and therefore may contribute to the structural changes of diabetic nephropathy.