The laminin-5 component of the extracellular matrices of certain cultured cells such as the rat epithelial cell line 804G and the human breast epithelial cell MCF-10A is capable of nucleating assembly of cell– matrix adhesive devices called hemidesmosomes when other cells are plated upon them. These matrices also impede cell motility. In contrast, cells plated onto the laminin-5–rich matrices of pp126 epithelial cells fail to assemble hemidesmosomes and are motile. To understand these contradictory phenomena, we have compared the forms of heterotrimeric laminin-5 secreted by 804G and MCF-10A cells with those secreted by pp126 cells, using a panel of laminin-5 subunit-specific antibodies. The α3 subunit of laminin-5 secreted by pp126 cells migrates at 190 kD, whereas that secreted by 804G and MCF-10A cells migrates at 160 kD. The pp126 cell 190-kD α3 chain of laminin-5 can be specifically proteolyzed by plasmin to a 160-kD species at enzyme concentrations that do not apparently effect the laminin-5 β and γ chains. After plasmin treatment, pp126 cell laminin-5 not only impedes cell motility but also becomes competent to nucleate assembly of hemidesmosomes. The possibility that plasmin may play an important role in processing laminin-5 subunits is supported by immunofluorescence analyses that demonstrate colocalization of laminin-5 and plasminogen in the extracellular matrix of MCF-10A and pp126 cells. Whereas tissue-type plasminogen activator (tPA), which converts plasminogen to plasmin, codistributes with laminin-5 in MCF-10A matrix, tPA is not present in pp126 extracellular matrix. Treatment of pp126 laminin-5–rich extracellular matrix with exogenous tPA results in proteolysis of the laminin-5 α3 chain from 190 to 160 kD. In addition, plasminogen and tPA bind laminin-5 in vitro. In summary, we provide evidence that laminin-5 is a multifunctional protein that can act under certain circumstances as a motility and at other times as an adhesive factor. In cells in culture, this functional conversion appears dependent upon and is regulated by tPA and plasminogen.