Insulin-like growth factor (IGF) signaling is critical for osteoblast development and IGF binding protein (IGFBP)-4 is one of the principle IGFBPs expressed by osteoblasts. Release of bound IGF via proteolytic degradation of IGFBP-4 is likely to be critical for osteoblast development. We have investigated whether IGF-sensitive, IGFBP-4 degradation in mouse MC3T3-E1 osteoblasts is due to the metzincin pregnancy-associated plasma protein (PAPP)-A. Degradation of IGFBP-4 by PAPP-A or MC3T3-E1 conditioned medium was enhanced by IGF-II but inhibited by mutation of basic residues at or near the PAPP-A cleavage site in IGFBP-4. Furthermore, immunodepletion of PAPP-A from MC3T3-E1 conditioned medium abolished IGFBP-4 degradation. We also found that PAPP-A messenger RNA was expressed throughout differentiation of MC3T3-E1 cells. These results demonstrate for the first time that PAPP-A is the IGFBP-4 protease in MC3T3-E1 cells, a widely used model for osteoblast development, and that PAPP-A may regulate IGF release throughout osteoblast differentiation.