Transforming growth factor betas (TGF-betas) are multifunctional and pleiotropic growth factors. Their major effects include inhibition of cell proliferation and enhancement of extracellular matrix production. TGF-betas are secreted from cells as latent complexes, consisting of mature dimeric growth factor, the latency-associated propeptide (LAP), and a distinct gene product, latent TGF-beta binding protein LTBP. The secreted complex is targeted to specific locations in the extracellular matrix by the appropriate LTBP. The latent complex needs subsequently to be activated. Most studies describing biological effects of TGF-beta have been carried out in cell cultures using high concentrations of active, soluble TGF-beta, where appropriate targeting of the growth factor is missing. However, TGF-beta is produced and secreted in vivo as a latent complex in a specific and targeted manner. Various experimental approaches have convincingly shown the importance of the activation of latent TGF-beta, as well as the importance of LTBPs as targeting molecules of the effects of TGF-beta. Essential steps in the activation appear to be cellular recognition of extracellular matrix-associated LTBPs and subsequent recognition of the associated latent TGF-beta. Cell recognition by specific molecules like integrins and proteolytic events involving plasminogen activation evidently play multifaceted roles in the regulation of TGF-beta activation.