The metalloproteinase ADAMTS-2 has procollagen I N-proteinase activity capable of cleaving procollagens I and II N-propeptides in vitro, whereas mutations in the ADAMTS-2 gene in dermatosparaxis and Ehlers-Danlos syndrome VIIC show this enzyme to be responsible in vivo for most biosynthetic processing of procollagen I N-propeptides in skin. Yet despite its important role in the regulation of collagen deposition, information regarding regulation and substrate specificity of ADAMTS-2 has remained sparse. Here we demonstrate that ADAMTS-2 can, like the procollagen C-proteinases, be regulated by transforming growth factor-beta 1 (TGF-beta 1), with implications for mechanisms whereby this growth factor effects net increases in formation of extracellular matrix. TGF-beta 1 induced ADAMTS-2 mRNA approximately 8-fold in MG-63 osteosarcoma cells in a dose- and time-dependent, cycloheximide-inhibitable manner, which appeared to operate at the transcriptional level. Secreted ADAMTS-2 protein induced by TGF-beta 1 was 132 kDa and was identical in size to the fully processed, active form of the protease. Biosynthetic processing of ADAMTS-2 to yield the 132-kDa form is shown to be a two-step process involving sequential cleavage by furin-like convertases at two sites. Surprisingly, purified recombinant ADAMTS-2 is shown to cleave procollagen III N-propeptides as effectively as those of procollagens I and II, whereas processing of procollagen III is shown to be decreased in Ehlers-Danlos VIIC. Thus, the dogma that procollagen I and procollagen III N-proteinase activities are provided by separate enzymes appears to be false, whereas the phenotypes of dermatosparaxis and Ehlers-Danlos VIIC may arise from defects in both type I and type III collagen biosynthesis.