The insulin-like growth factor-binding protein 4 (IGFBP-4), the most abundant IGF-binding protein produced by rodent smooth muscle cells (SMC), is degraded by specific protease(s) potentially releasing IGF-I for local bioactivity. IGFBP-4 protease(s) recognizes basic residues within the midregion of the molecule. We constructed a mutant IGFBP-4 with the cleavage domain substitution 119-KHMAKVRDRSKMK-133 to 119-AAMAAVADASAMA-133. Myc-tagged native and IGFBP-4.7A retained equivalent IGF-I binding affinity. Whereas native IGFBP-4 was cleaved by SMC-conditioned medium, IGFBP-4.7A was completely resistant to proteolysis. To explore the function of the protease-resistant IGFBP-4 in vivo, expression of the mutant and native proteins was targeted to SMC of transgenic mice by means of a smooth muscle alpha-actin promoter. Transgene expression was confined to SMC-rich tissues in all lines. Bladder and aortic immunoreactive IGFBP-4/transgene mRNA ratios in SMP8-BP4.7A mice were increased by 2- to 4-fold relative to SMP8-BP4 mice, indicating that the IGFBP-4.7A protein was stabilized in vivo. SMP8-BP4.7A mice had lower aortic, bladder, and stomach weight and intestinal length relative to SMP8-BP4 counterparts matched for protein expression by Western blotting. Thus, IGFBP-4.7A results in greater growth inhibition than equivalent levels of native IGFBP-4 in vivo, demonstrating a role for IGFBP-4 proteolysis in the regulation of IGF-I action.