Angiostatin, a cleavage product of plasminogen, has been shown to inhibit endothelial cell proliferation and metastatic tumor cell growth. Recently, the production of angiostatin has been correlated with tumor-associated macrophage production of elastolytic metalloproteinases in a murine model of Lewis lung cell carcinoma. In this report we demonstrate that purified murine and human matrix metalloproteinases generate biologically functional angiostatin from plasminogen. Macrophage elastase (MMP-12 or MME) proved to be the most efficient angiostatin-producing MMP. MME was followed by gelatinases and then the stomelysins in catalytic efficiency; interstitial collagenases had little capacity to generate angiostatin. Both recombinant angiostatin and angiostatin generated from recombinant MME-treated plasminogen inhibited human microvascular endothelial cell proliferation and differentiation in vitro. Finally, employing macrophages isolated from MME-deficient mice and their wild-type littermates, we demonstrate that MME is required for the generation of angiostatin that inhibits the proliferation of human microvascular endothelial cells.