Plasmin is processed in the conditioned medium of HT1080 fibrosarcoma cells producing fragments with the domain structures of the angiogenesis inhibitor, angiostatin, and microplasmin. Angiostatin consists of kringle domains 1-4 and part of kringle 5, while microplasmin consists of the remainder of kringle 5 and the serine proteinase domain. Our findings indicate that formation of angiostatin/microplasmin involves reduction of plasmin by a plasmin reductase followed by proteolysis of the reduced enzyme. We present evidence that the Cys461-Cys540 and Cys511-Cys535 disulfide bonds in kringle 5 of plasmin were reduced by plasmin reductase. Plasmin reductase activity was secreted by HT1080 and Chinese hamster ovary cells and the human mammary carcinoma cell lines MCF-7, MDA231, and BT20 but not by the monocyte/macrophage cell line THP-1. Neither primary foreskin fibroblasts, blood monocyte/macrophages, nor macrovascular or microvascular endothelial cells secreted detectable plasmin reductase. In contrast, cultured bovine and rat vascular smooth muscle cells secreted small but reproducible levels of plasmin reductase. Reduction of the kringle 5 disulfide bonds triggered cleavage at either Arg529-Lys530 or two other positions C-terminal of Cys461 in kringle 5 by a serine proteinase. Plasmin autoproteolysis could account for the cleavage, although another proteinase was mostly responsible in HT1080 conditioned medium. Three serine proteinases with apparent Mr of 70, 50, and 39 were purified from HT1080 conditioned medium, one or more of which could contribute to proteolysis of reduced plasmin.