Fibroblasts migrate into and repopulate connective tissue wounds. At the wound edge, fibroblasts differentiate into myofibroblasts, and they promote wound closure. Regulated fibroblast-to-myofibroblast differentiation is critical for regenerative healing. Previous studies have focused on the role in fibroblasts of urokinase plasmingen activator/urokinase plasmingen activator receptor (uPA/uPAR), an extracellular protease system that promotes matrix remodeling, growth factor activation, and cell migration. Whereas fibroblasts have substantial uPA activity and uPAR expression, we discovered that cultured myofibroblasts eventually lost cell surface uPA/uPAR. This led us to investigate the relevance of uPA/uPAR activity to myofibroblast differentiation. We found that fibroblasts expressed increased amounts of full-length cell surface uPAR (D1D2D3) compared with myofibroblasts, which had reduced expression of D1D2D3 but increased expression of the truncated form of uPAR (D2D3) on their cell surface. Retaining full-length uPAR was found to be essential for regulating myofibroblast differentiation, because 1) protease inhibitors that prevented uPAR cleavage also prevented myofibroblast differentiation, and 2) overexpression of cDNA for a noncleavable form of uPAR inhibited myofibroblast differentiation. These data support a novel hypothesis that maintaining full-length uPAR on the cell surface regulates the fibroblast to myofibroblast transition and that down-regulation of uPAR is necessary for myofibroblast differentiation.