SPARC, a matricellular protein that affects cellular adhesion and proliferation, is produced in remodeling tissue and in pathologies involving fibrosis and angiogenesis. In this study we have asked whether peptides generated from cleavage of SPARC in the extracellular milieu can regulate angiogenesis. Matrix metalloproteinase (MMP)-3, but not MMP-1 or 9, showed significant activity toward SPARC. Limited digestion of recombinant human (rhu)SPARC with purified catalytic domain of rhuMMP-3 produced three major fragments, which were sequenced after purification by HPLC. Three synthetic peptides (Z-1, Z-2, and Z-3) representing motifs from each fragment were tested in distinct assays of angiogenesis. Peptide Z-1 (3.9 kDa, containing a Cu2+-binding sequence KHGK) exhibited a biphasic effect on [3H]thymidine incorporation by cultured endothelial cells and stimulated vascular growth in the chick chorioallantoic membrane (CAM). In contrast, peptides Z-2 (6.1 kDa, containing Ca2+-binding EF hand-1) and Z-3 (2.2 kDa, containing neither Cu2+-binding motifs nor EF hands), inhibited cell proliferation in a concentration-dependent manner and exhibited no effects on vessel growth in the CAM. Reciprocal results were obtained in a migration assay in native collagen gels: peptide Z-1 was ineffective over a range of concentrations, whereas Z-2 or Z-3 stimulated cell migration. Therefore, proteolysis of SPARC by MMP-3 produced peptides that regulate endothelial cell proliferation and/or migration in vitro in a mutually exclusive manner. One of these peptides containing KHGK also demonstrated a concentration-dependent effect on angiogenesis.