Increased transforming growth factor-beta (TGF-beta) signaling has been observed at the tumor-bone interface of mammary tumor-induced osteolytic lesions despite no observed transcriptional up-regulation of TGF-beta. To this point, the mechanism for enhanced TGF-beta signaling remains unclear. The bulk of TGF-beta that is released at the tumor-bone interface is in an inactive form secondary to association with beta-latency-associated protein and latency TGF-beta binding protein. We hypothesized that the observed increase in TGF-beta signaling is due to increased cathepsin G-dependent, matrix metalloproteinase 9 (MMP9)-mediated activation of latent TGF-beta. MMP9 is capable of activating latent TGF-beta, and we observed that decreased production of MMP9 was associated with reduced TGF-beta signaling. Similar to TGF-beta, MMP9 is released in an inactive form and requires proteolytic activation. We showed that cathepsin G, which we have previously shown to be up-regulated at the tumor-bone interface, is capable of activating pro-MMP9. Inhibition of cathepsin G in vivo significantly reduced MMP9 activity, increased the ratio of latent TGF-beta to active TGF-beta, and reduced the level of TGF-beta signaling. Our proposed model based on these results is that cathepsin G is up-regulated through tumor-stromal interactions and activates pro-MMP9, active MMP9 cleaves and releases active TGF-beta, and active TGF-beta can then promote tumor growth and enhance osteoclast activation and subsequent bone resorption. Thus, for the first time, we have identified cathepsin G and MMP9 as proteases involved in enhanced TGF-beta signaling at the tumor-bone interface of mammary tumor-induced osteolytic lesions and have identified these proteases as potential therapeutic targets.