Insulin-like growth factor (IGF)-binding protein-5 (IGFBP-5) is cleaved by a serine protease that is secreted by fibroblasts and porcine smooth muscle cells (pSMC) in culture. To investigate whether other serine proteases could cleave this substrate at physiologically relevant concentrations, we determined the proteolytic effects of thrombin on IGFBP-5. Human alpha-thrombin (0.0008 NIH U/ml) cleaved IGFBP-5 into 24-, 23-, and 20-kDa non-IGF-I-binding fragments. Cleavage occurred at a physiologically relevant thrombin concentration. The effect was specific for IGFBP-5, as other forms of IGFBPs, e.g. IGFBP-1, IGFBP-2, and IGFBP-4 were not cleaved by thrombin. Although IGFBP-3 was cleaved by thrombin, this effect required a 50-fold greater thrombin concentration. [35S]Methionine labeling followed by immunoprecipitation confirmed that IGFBP-5 that was constitutively synthesized by pSMC cultures was also degraded by thrombin into 24-, 23-, and 20-kDa fragments. The binding of IGF-I to IGFBP-5 partially inhibited IGFBP-5 degradation by thrombin, and an IGF analog that does not bind to IGFBP-5 had no effect. Thrombin did not account for the serine protease activity that had been shown previously to be present in pSMC-conditioned medium. This was proven by showing that 1) no immunoreactive thrombin could be detected in the pSMC-conditioned medium; 2) the IGFBP-5 fragments that were generated by thrombin showed three cleavage sites (Arg192-Ala193, Arg156-Ile157, and Lys120-His121), whereas the serine protease in conditioned medium cleaves IGFBP-5 at a different site; and 3) hirudin had no effect on IGFBP-5 cleavage by the protease in pSMC medium; however, it inhibited IGFBP-5 degradation by thrombin. To determine the physiological significance of IGFBP-5 cleavage, the effect of an IGFBP-5 mutant that is resistant to cleavage by the pSMC protease and has been shown to inhibit IGF-I actions in pSMC was determined. This mutant inhibited IGF-I-stimulated DNA synthesis, but if thrombin was added simultaneously, IGF-I was fully active. In summary, physiological concentrations of thrombin degrade IGFBP-5. Degradation can be blocked by hirudin and is partially inhibited by IGF-I binding. Generation of active thrombin in vessel walls may be a physiologically relevant mechanism for controlling IGF-I bioactivity.