Analysis of the transforming growth factor α (TGFα) cDNA predicts that the mature TGFα polypeptide is cleaved from the extracellular domain of its precursor, which is an integral membrane protein. Furthermore, the cleavage sites for the release of this mitogen are compatible with the participation of an elastaselike protease. We have immunohistochemically localized TGFα to the vascular smooth muscle cells in the arterioles. To investigate whether polymorphonuclear (PMN) leukocytic elastase, a blood-borne protease, could process the cell surface TGFα, NR6 cells were transfected with the rat TGFα cDNA. The cDNA encoded the entire open reading frame, and its expression was under the control of the mouse metallothionein I promoter. A cloned transfectant, termed 1B2, synthesized the TGFα precursor in a zinc-inducible manner, and the precursor was localized to the cell surface. Western blot (immunoblot) analysis indicated that treatment of the zinc-induced 1B2 cells with either PMN leukocytic or pancreatic elastase resulted in the release of the mature TGFα polypeptide. The released TGFα was bioactive, as it was capable of both competing with epidermal growth factor for binding to its receptor and stimulating [3H]thymidine incorporation in the mitogenic assay. Formaldehyde fixation of the 1B2 cells eliminated basal release of TGFα but allowed normal processing by both PMN leukocyte and pancreatic elastase to occur. However, human cathepsin G, bovine pancreatic α1-chymotrypsin, collagenase, trypsin, subtilisin, and plasmin failed to release any detectable fragments of the TGFα precursor from the fixed cells. The location of TGFα in the arterioles and the ability of PMN leukocytic elastase to process the membrane-bound TGFα precursor suggests a novel role for this elastase at the wound site.