Insulin-like growth factor binding proteins (IGFBPs) modulate IGF action. Proteolytic cleavage of IGFBPs yields lower molecular forms with reduced ability to bind IGFs, thereby increasing IGF bioavailability. In serum from normal adult rats, we found a proteolytic activity for IGFBP-3, presumably a cation-dependent serine protease. It is lacking in serum from hypophysectomized rats and restored by infusion of growth hormone (GH), but not IGF I. Thus, IGF I does not appear to mediate the GH effect on IGFBP-3 proteolysis. Rather, GH seems to modulate IGF action indirectly via alteration of IGFBP-3 structure.