We have previously reported the presence of proteolytic activity in conditioned medium from human fibroblast cultures that cleaves insulin-like growth factor-binding protein-5 (IGFBP-5) into non-IGF-I-binding fragments. Coincubation of IGF-I or IGF-II and IGFBP-5 with fibroblast cultures decreased proteolysis. The protease was purified by heparin-Sepharose affinity chromatography. The purified protease cleaved IGFBP-5 into 22-, 20-, and 17-kilodalton non-IGF-I-binding fragments. Protease inhibitor profiles obtained using partially purified enzyme showed that it was a calcium-dependent serine protease. After chelation with EDTA, the activity could only be partially restored with zinc, indicating that it was probably not a metalloprotease. The protease was specific for IGFBP-5 and did not cleave pure IGFBP-1, -2, -3, or -4. IGF-I and IGF-II caused minimal inhibition of proteolysis in vitro. This suggests that the IGF-I-induced increase in IGFBP-5 in fibroblast medium is only partially due to direct protease inhibition. Heparin, antithrombin-III (AT-III), and heparin cofactor-II had inhibitory activity, and heparin potentiated the activity of AT-III. Synthetic peptides, that contained the active sites of AT-III and alpha 1-antichymotrypsin, were also inhibitory. Peptides containing sequences found in two basic regions of IGFBP-5 were tested, and one had inhibitory activity. In summary, fibroblasts secrete a serine protease that cleaves IGFBP-5 and is specific for this form of IGFBP. The protease has properties that are similar to kallikreins, a family of serine proteases that is known to cleave epidermal and nerve growth factor-binding proteins.