Transforming growth factor-beta-1 (TGF-beta1) is secreted by cells in a latent form (L-TGF-beta1) noncovalently bound to a latency-associated peptide. Activated alveolar macrophages obtained from rat lungs after bleomycin-induced pulmonary injury released increased amounts of active TGF-beta1 as well as plasmin, a protease, and thrombospondin-1 (TSP-1), a trimeric glycoprotein. Previously we had demonstrated that plasmin was critical to the activation of L-TGF- beta1. In the present study we demonstrated that TSP-1 is also important for the activation of L-TGF- beta1 because the activation can be inhibited by anti-TSP-1 monoclonal antibody. Proteins obtained from alveolar macrophage cell lysates immunoprecipitated with antibodies specific for TSP-1 were identified on immunoblots as LAP and TGF-beta1, indicating that TSP-1/L-TGF-beta1 complexes are present on alveolar macrophages. However, in the presence of plasmin both latency-associated peptide and TGF-beta1 were decreased in the same cell lysates, indicating that L-TGF-beta1 associated with TSP-1 is released by plasmin. Using immunofluorescence and antibodies to TGF-beta1 and CD36, a receptor for TSP-1, there was colocalization of TGF-beta1 with CD36. Because TSP-1 but not TGF-beta1 is a natural ligand for CD36, these findings suggest that the L-TGF-beta1 in a complex with TSP-1 localizes to the macrophage cell surface when TSP-1 interacts with its receptor, CD36. Furthermore, the association of TSP-1/L-TGF-beta1 complex with CD36 is necessary to the activation of L-TGF-beta1 because antibodies to CD36 prevent the colocalization of TGF-beta1 with CD36 as observed by immunofluorescence and inhibit activation of the L-TGF-beta1 by explanted alveolar macrophages. These findings suggest that activation of L-TGF-beta1 by plasmin occurs at the cell surface of activated alveolar macrophages and requires a TSP-1/CD36 interaction.