Platelet-derived growth factor C (PDGF-C) is one of four members in the PDGF family of growth factors, which are known mitogens and survival factors for cells of mesenchymal origin. PDGF-C has a unique two-domain structure consisting of an N-terminal CUB and a conserved C-terminal growth factor domain that are separated by a hinge region. PDGF-C is secreted as a latent dimeric factor (PDGF-CC), which undergoes extracellular removal of the CUB domains to become a PDGF receptor alpha agonist. Recently, the multidomain serine protease tissue plasminogen activator (tPA), a thrombolytic agent used for treatment of acute ischemic stroke, was shown to cleave and activate PDGF-CC. In this study we determine the molecular mechanism of tPA-mediated activation of PDGF-CC. Using various PDGF-CC and tPA mutants, we were able to demonstrate that both the CUB and the growth factor domains of PDGF-C, as well as the kringle-2 domain of tPA, are required for the interaction and cleavage to occur. We also show that Arg231 in PDGF-C is essential for tPA-mediated proteolysis and that the released "free" CUB domain of PDGF-C can act as a competitive inhibitor of the cleavage reaction. Furthermore, we studied how the PDGF-C/tPA axis is regulated in primary fibroblasts and found that PDGF-C expression is down-regulated by hypoxia but induced by transforming growth factor (TGF)-beta1 treatment. Elucidating the regulation and the mechanism of tPA-mediated activation of PDGF-CC will advance our knowledge of the physiological function of PDGF-CC and tPA and may provide new therapeutic opportunities for thrombolytic and cardiovascular therapies.