During the course of human pregnancy, there is a marked increase in insulin-like growth factor (IGF) binding protein (IGFBP)-3 protease activity in maternal serum that is first evident at 6 weeks of gestation, persists through term, and returns to nonpregnancy levels by day 5 postpartum. This protease activity cleaves IGFBP-3 into smaller fragments that have markedly reduced affinity for the IGFs. To date, the precise identity and cellular origin of the pregnancy-associated serum IGFBP-3 protease have not been established. To investigate whether placental and/or decidual tissues, which uniquely develop during pregnancy, may be sources of the pregnancy-associated serum IGFBP protease, we examined the secretion of IGFBP-3 protease in vitro by isolated human cytotrophoblasts or fibroblasts from second trimester placentae and by in vitro decidualized human endometrial stromal cells. Cytotrophoblasts were either cultured alone, which favors aggregation and fusion, or cocultured with decidualized endometrial stromal cells, which favors differentiation to an invasive phenotype. IGFBP-3 protease activity was detected in trophoblast, but not in placental fibroblast or decidualized endometrial cultures, and was also present in trophoblast-endometrial cocultures. Western ligand blot and Western immunoblot analyses showed that most of the endogenous IGFBP-3 in trophoblast cultures was in the form of low molecular weight fragments with reduced IGF binding affinity. The substrate specificity of the trophoblast-derived protease was identical to that in pregnancy serum, showing activity against IGFBP-2, -3, and -4, but being inactive against IGFBP-1. IGFBP-3 proteolysis by both pregnancy serum and trophoblast conditioned medium showed a major peak of activity at neutral pH. The trophoblast-derived activity caused time-and temperature-dependent proteolysis of IGFBP-3 into fragments of identical size as those produced by pregnancy serum, and also shared its sensitivity to protease inhibitors: highly sensitive to EDTA and o-phenanthroline, partially sensitive to the serine protease inhibitors AEBSF and aprotinin, and insensitive to alpha2-antiplasmin, and to aspartic and cysteine protease inhibitors. IGFBP-3 proteolysis by both pregnancy serum and trophoblast conditioned medium was also insensitive to tissue inhibitor of metalloproteinase-1, precluding the involvement of the matrix metalloproteinases. In contrast, both the pregnancy serum- and trophoblast-derived proteases were preferentially inhibited by a hydroxamic acid derivative with selective activity against the disintegrin-metalloproteinase tumor necrosis factor-alpha converting enzyme. This study shows that placental trophoblasts produce an IGFBP-3 protease with characteristics very similar to the activity found in pregnancy serum and indicates these cells at the maternal-fetal interface are a potential source of the pregnancy-associated serum IGFBP-3 protease. The findings further suggest that the main IGFBP-3 protease activity in both pregnancy serum and trophoblast conditioned medium may correspond to a disintegrin-metalloproteinase type enzyme.