High biological activity of the transforming growth factor (TGF)-beta-Smad pathway characterizes the malignant phenotype of malignant gliomas and confers poor prognosis to glioma patients. Accordingly, TGF-beta has become a novel target for the experimental treatment of these tumors. TGF-beta is processed by furin-like proteases (FLP) and secreted from cells in a latent complex with its processed propeptide, the latency-associated peptide (LAP). Latent TGF-beta-binding protein 1 (LTBP-1) covalently binds to this small latent TGF-beta complex (SLC) and regulates its function, presumably via interaction with the extracellular matrix (ECM). We report here that the levels of LTBP-1 protein in vivo increase with the grade of malignancy in gliomas. LTBP-1 is associated with the ECM as well as secreted into the medium in cultured malignant glioma cells. The release of LTBP-1 into the medium is decreased by the inhibition of FLP activity. Gene-transfer mediated overexpression of LTBP-1 in glioma cell lines results in an increase inTGF-beta activity. Accordingly, Smad2 phosphorylation as an intracellular marker of TGF-beta activity is enhanced. Conversely, LTBP-1 gene silencing reduces TGF-beta activity and Smad2 phosphorylation without affecting TGF-beta protein levels. Collectively, we identify LTBP-1 as an important modulator of TGF-beta activation in glioma cells, which may contribute to the malignant phenotype of these tumors.