Transforming growth factor-beta 1 (TGF-beta 1) induces increased extracellular matrix deposition. Bone morphogenetic protein-1 (BMP-1) also plays key roles in regulating vertebrate matrix deposition; it is the procollagen C-proteinase (PCP) that processes procollagen types I-III, and it may also mediate biosynthetic processing of lysyl oxidase and laminin 5. Here we show that BMP-1 is itself up-regulated by TGF-beta 1 and that secreted BMP-1, induced by TGF-beta 1, is either processed to an active form or remains as unprocessed proenzyme, in a cell type-dependent manner. In MG-63 osteosacrcoma cells, TGF-beta 1 elevated levels of BMP-1 mRNA similar to 7-fold and elevated levels of mRNA for mammalian tolloid (mTld), an alternatively spliced product of the BMP1 gene, to a lesser extent, Induction of RNA was dose- and time-dependent and cycloheximide-inhibitable. Secreted BMP-1 and mTld, induced by TGF-beta 1 in MG-63 and other fibrogenic cell cultures, were predominantly in forms in which proregions had been removed to yield activated enzyme. TGF-beta 1 treatment also induced procollagen N-proteinase activity in fibrogenic cultures, while expression of the procollagen C-proteinase enhancer (PCPE), a glycoprotein that stimulates PCP activity, was unaffected. In contrast to fibrogenic cells, keratinocytes lacked detectable PCPE under any culture conditions and were induced by TGF-beta 1 to secrete BMP-1 and mTld predominantly as unprocessed proenzymes.