Seminal fluid proteins have been shown to play important roles in male reproductive success, but the mechanisms for this regulation remain largely unknown. In Caenorhabditis elegans, sperm differentiate from immature spermatids into mature, motile spermatozoa during a process termed sperm activation. For C. elegans males, sperm activation occurs during insemination of the hermaphrodite and is thought to be mediated by seminal fluid, but the molecular nature of this activity has not been previously identified. Here we show that TRY-5 is a seminal fluid protease that is required in C. elegans for male-mediated sperm activation. We observed that TRY-5::GFP is expressed in the male somatic gonad and is transferred along with sperm to hermaphrodites during mating. In the absence of TRY-5, male seminal fluid loses its potency to transactivate hermaphrodite sperm. However, TRY-5 is not required for either hermaphrodite or male fertility, suggesting that hermaphrodite sperm are normally activated by a distinct hermaphrodite-specific activator to which male sperm are also competent to respond. Within males, TRY-5::GFP localization within the seminal vesicle is antagonized by the protease inhibitor SWM-1. Together, these data suggest that TRY-5 functions as an extracellular activator of C. elegans sperm. The presence of TRY-5 within the seminal fluid couples the timing of sperm activation to that of transfer of sperm into the hermaphrodite uterus, where motility must be rapidly acquired. Our results provide insight into how C. elegans has adopted sex-specific regulation of sperm motility to accommodate its male-hermaphrodite mode of reproduction.