Insulin-like growth factor-binding protein-4 (IGFBP-4) is an important regulator of insulin-like growth factor-I (IGF-I) anabolic activity in bone. Although cultured human osteoblast-like (hOB) cells have been reported to secrete IGFBP-4, we could not detect IGFBP-4 protein in 8 of 27 individual donor-derived hOB-cell conditioned medium (hOB-CM) samples examined by Western ligand blotting. Nonetheless, this subset of hOB cells had normal IGFBP-4 messenger ribonucleic acid expression and protein secretion. Regulation of IGFBP-4 levels in hOB cultures appeared to occur extracellularly. hOB cells produce an IGFBP-4 proteinase that requires the presence of IGF for cleavage of the IGFBP-4 molecule into 2 fragments of approximately 18 and 14 kilodaltons. These fragments are not detected by Western ligand blotting. Our data indicate that elevated endogenous levels of IGF can activate IGFBP-4 proteolysis, because in hOB cultures lacking detectable IGFBP-4 protein 1) basal IGF messenger ribonucleic acid expression was increased; 2) IGF-II peptide levels were elevated; 3) IGF-neutralizing antibodies added to hOB-CM attenuated the proteolysis of exogenous IGFBP-4; and 4) recombinant human IGFBP-4 was proteolyzed into 2 immunoreactive fragments of approximately 18 and 14 kilodaltons during cell-free incubations in these hOB-CM without the addition of exogenous IGF. In conclusion, elevated IGF expression and secretion can contribute to enhanced proteolysis of endogenous and exogenous IGFBP-4 via a proteinase secreted by cultured hOB cells. Levels of endogenous IGF peptide may determine IGFBP-4 availability in the bone microenvironment and, thus, modulate the local cell response to IGF-I.