Angiostatin, a potent naturally occurring inhibitor of angiogenesis and growth of tumor metastases, is generated by cancer-mediated proteolysis of plasminogen. Human prostate carcinoma cells (PC-3) release enzymatic activity that converts plasminogen to angiostatin. We have now identified two components released by PC-3 cells, urokinase (uPA) and free sulfhydryl donors (FSDs), that are sufficient for angiostatin generation. Furthermore, in a defined cell-free system, plasminogen activators [uPA, tissue-type plasminogen activator (tPA), or streptokinase], in combination with one of a series of FSDs (N-acetyl-l-cysteine, d-penicillamine, captopril, l-cysteine, or reduced glutathione] generate angiostatin from plasminogen. An essential role of plasmin catalytic activity for angiostatin generation was identified by using recombinant mutant plasminogens as substrates. The wild-type recombinant plasminogen was converted to angiostatin in the setting of uPA/FSD; however, a plasminogen activation site mutant and a catalytically inactive mutant failed to generate angiostatin. Cell-free derived angiostatin inhibited angiogenesis in vitro and in vivo and suppressed the growth of Lewis lung carcinoma metastases. These findings define a direct mechanism for cancer-cell-mediated angiostatin generation and permit large-scale production of bioactive angiostatin for investigation and potential therapeutic application.