We have recently reported that insulin-like growth factor (IGF)-binding protein-3 (IGFBP-3) can significantly increase ceramide-induced apoptosis in an Hs578T breast carcinoma cell line in an IGF-independent manner. It was observed in that study that IGFBP-3 added to the cultures was proteolytically modified, generating a specific pattern of fragmentation. We have also previously reported that almost all of the IGFBP-3 outside the circulation in extravascular fluids is in a fragmented form, apparently due to the activity of a cation-dependent serine protease. The aim of this study was to investigate the role of proteolysis in the IGFBP-3 enhancement of C2-induced apoptosis. In this study we confirmed that preincubation of Hs578T cells with IGFBP-3 enhances the apoptotic effect of the ceramide analog C2. The presence of IGF-I completely inhibited the enhancement effect, apparently by inhibiting cell surface association and proteolytic modification. The presence of a serine protease inhibitor [4-(2-aminoethyl)benesulfonyl fluoride] completely inhibited the enhancement effect of IGFBP-3, and Western immunoblotting of conditioned medium and cell surface-associated IGFBP-3 revealed that proteolytic fragmentation of the IGFBP-3 was reduced. In addition, fragments from the incubation of IGFBP-3 with plasmin were able to enhance the susceptibility of Hs578T cells to C2. The effect of these fragments could, however, also be reduced by 4-(2-aminoethyl)benesulfonyl fluoride despite the fact that IGFBP-3 was already fragmented. This suggests additional roles for serine proteases in the IGFBP-3 effect on C2-induced apoptosis in addition to the cleavage of the binding protein.