Transforming growth factor-beta (TGF-beta) is a potent growth regulatory protein secreted by virtually all cells in a latent form. A major mechanism of regulating TGF-beta activity occurs through factors that control the processing of the latent to the biologically active form of the molecule. We have shown previously that thrombospondin 1 (TSP1), a platelet alpha-granule and extracellular matrix protein, activates latent TGF-beta via a protease- and cell-independent mechanism and have localized the TGF-beta binding/activation region to the type 1 repeats of platelet TSP1. We now report that recombinant human TSP1, but not recombinant mouse TSP2, activates latent TGF-beta. Activation was further localized to the unique sequence RFK found between the first and the second type 1 repeats of TSP1 (amino acids 412-415) by the use of synthetic peptides. A peptide with the corresponding sequence in TSP2, RIR, was inactive. In addition, a hexapeptide GGWSHW, based on a sequence present in the type 1 repeats of both TSP1 and TSP2, inhibited the activation of latent TGF-beta by TSP1. This peptide bound to 125I-active TGF-beta and inhibited interactions of TSP1 with latent TGF-beta. TSP2 also inhibited activation of latent TGF-beta by TSP1, presumably by competitively binding to TGF-beta through the WSHW sequence. These studies show that activation of latent TGF-beta is mediated by two sequences present in the type 1 repeats of TSP1, a sequence (GGWSHW) that binds active TGF-beta and potentially orients the TSP molecule and a second sequence (RFK) that activates latent TGF-beta. Peptides based on these sites have potential therapeutic applications for modulation of TGF-beta activation.