The PDGF (platelet-derived growth factor) family members are potent mitogens for cells of mesenchymal origin and serve as important regulators of cell migration, survival, apoptosis and transformation. Tumour-derived PDGF ligands are thought to function in both autocrine and paracrine manners, activating receptors on tumour and surrounding stromal cells. PDGF-C and -D are secreted as latent dimers, unlike PDGF-A and -B. Cleavage of the CUB domain from the PDGF-C and -D dimers is required for their biological activity. At present, little is known about the proteolytic processing of PDGF-C, the rate-limiting step in the regulation of PDGF-C activity. In the present study we show that the breast carcinoma cell line MCF7, engineered to overexpress PDGF-C, produces proteases capable of cleaving PDGF-C to its active form. Increased PDGF-C expression enhances cell proliferation, anchorage-independent cell growth and tumour cell motility by autocrine signalling. In addition, MCF7-produced PDGF-C induces fibroblast cell migration in a paracrine manner. Interestingly, PDGF-C enhances tumour cell invasion in the presence of fibroblasts, suggesting a role for tumour-derived PDGF-C in tumour-stromal interactions. In the present study, we identify tPA (tissue plasminogen activator) and matriptase as major proteases for processing of PDGF-C in MCF7 cells. In in vitro studies, we also show that uPA (urokinase-type plasminogen activator) is able to process PDGF-C. Furthermore, by site-directed mutagenesis, we identify the cleavage site for these proteases in PDGF-C. Lastly, we provide evidence suggesting a two-step proteolytic processing of PDGF-C involving creation of a hemidimer, followed by GFD-D (growth factor domain dimer) generation.