Transforming growth factor‐β (TGF‐β) is normally secreted in a latent form, and plasmin‐mediated proteolytic cleavage of latency‐associated peptide (LAP), a component of latent TGF‐β complex that makes the complex inactive, activates latent TGF‐β. In the present study, we investigated the possible involvement of calpain, one of the cysteine proteases, in the activation of latent TGF‐β. When recombinant latent TGF‐β was incubated with calpain (1–10 u/ml) in a test tube, calpain cleaved LAP and released mature TGF‐β from the latent complex. When calpain was applied to cultured bovine capillary endothelial (BCE) cells, a low concentration of calpain (0.05–0.1 u/ml) inhibited the migration and proliferation of the cells, and these inhibitory effects were abrogated by anti‐TGF‐β antibody as well as by calpain inhibitor peptide, but not by α₂‐antiplasmin, a specific inhibitor of plasmin. Active TGF‐β was detected in the conditioned medium of BCE cells collected in the presence of calpain. Chemical cross‐linking of ¹²⁵I‐calpain to BCE cells followed by sodium dodecyl sulfate‐polyacrylamide gel electrophoresis (SDS‐PAGE) analysis indicated that calpain bound to the cell surface through chondroitinase ABC‐sensitive proteoglycan. In addition, treatment of the BCE cells with chondroitinase ABC abrogated the inhibitory effect of calpain on the migration of these cells. Our data thus suggest that calpain is able to activate latent TGF‐β through a mechanism independent of plasmin. This activation is efficient in the presence of cells, and calpain binds to the cell surface via proteoglycan and activates latent TGF‐β, which is targeted to the same surface. J. Cell. Physiol. 174:186–193, 1998. © 1998 Wiley‐Liss, Inc.