Annexin II heterotetramer (AIIt) is a Ca(2+)- and phospholipid-binding protein that consists of two copies of a p36 and p11 subunit. AIIt regulates the production and autoproteolysis of plasmin at the cell surface. In addition to its role as a key cellular protease, plasmin also plays a role in angiogenesis as the precursor for antiangiogenic proteins. Recently we demonstrated that the primary antiangiogenic plasmin fragment, called A(61) (Lys(78)-Lys(468)) was released from cultured cells. In the present study we report for the first time that AIIt possesses an intrinsic plasmin reductase activity. AIIt stimulated the reduction of the plasmin Cys(462)-Cys(541) bond in a time- and concentration-dependent manner, which resulted in the release of A(61) from plasmin. Mutagenesis of p36 C334S and either p11 C61S or p11 C82S inactivated the plasmin reductase activity of the isolated subunits, suggesting that specific cysteinyl residues participated in the plasmin reductase activity of each subunit. Furthermore, we demonstrated that the loss of AIIt from the cell surface of HT1080 cells transduced with a retroviral vector encoding p11 antisense dramatically reduced the cellular production of A(61) from plasminogen. This is the first demonstration that AIIt regulates the cellular production of the antiangiogenic plasminogen fragment, A(61).