Regulation of the activation of latent TGF-beta is essential for health as too much or too little TGF-beta activity can have serious, deleterious consequences. The processes that control conversion of the precursor to the biologically active form of TGF-beta in vivo are not well characterized. We have identified a mechanism for the activation of latent TGF-beta that involves binding of the secreted and extracellular matrix protein, thrombospondin-1 (TSP-1), to the latent precursor. Specific sequences in TSP-1 and in the precursor portion (the latency associate peptide-LAP) have been determined to be essential for activation of latent TGF-beta by TSP-1. It is thought that binding of TSP-1 to the latent complex induces a conformational rearrangement of the LAP in such a manner as to prevent the LAP from conferring latency on the mature domain of TGF-beta. A TSP-dependent mechanism of activation may be locally important during wound healing and in post-natal development of epithelial structures. The possible involvement of TSP-1 in TGF-beta activation during several disease processes is also discussed.