Transforming growth factor-beta1 (TGF-beta1), a tumour suppressing as well as tumour-promoting cytokine, is stored as an extracellular matrix-bound latent complex. We examined TGF-beta1 activation and localisation of TGF-beta1 activity in gastric cancer. Gastric tumours showed increased stromal and epithelial total TGF-beta1 staining by immunohistochemistry. Active TGF-beta1 was present in malignant epithelial cells, but most strongly in smooth muscle actin expressing fibroblasts. Normal gastric mucosa from the same patient showed some staining for total, and little for active TGF-beta1. Active TGF-beta1 levels were determined by ELISA on tissue homogenates, confirming a strong increase in active TGF-beta1 in tumours compared to corresponding normal mucosa. Moreover, high tumour TGF-beta1 activity levels were significantly associated with clinical parameters, including worse survival of the patients. Total and active TGF-beta1 levels were not correlated, suggesting a specific activation process. Of the different proteases tested, active TGF-beta1 levels were only correlated with urokinase activity levels. The correlation with urokinase activity suggests a role for plasmin in TGF-beta1 activation in the tumour microenvironment, resulting in transformation of resident fibroblasts to tumour promoting myofibroblasts. In conclusion we have shown localisation and clinical relevance of TGF-beta1 activity levels in gastric cancer.