Transforming growth factor β1 (TGFβ1), an important regulator of cell behavior, is secreted as a large latent complex (LLC) in which it is bound to its cleaved prodomain (latency-associated peptide [LAP]) and, via LAP, to latent TGFβ-binding proteins (LTBPs). The latter target LLCs to the extracellular matrix (ECM). Bone morphogenetic protein 1 (BMP1)–like metalloproteinases play key roles in ECM formation, by converting precursors into mature functional proteins, and in morphogenetic patterning, by cleaving the antagonist Chordin to activate BMP2/4. We provide in vitro and in vivo evidence that BMP1 cleaves LTBP1 at two specific sites, thus liberating LLC from ECM and resulting in consequent activation of TGFβ1 via cleavage of LAP by non–BMP1-like proteinases. In mouse embryo fibroblasts, LAP cleavage is shown to be predominantly matrix metalloproteinase 2 dependent. TGFβ1 is a potent inducer of ECM formation and of BMP1 expression. Thus, a role for BMP1-like proteinases in TGFβ1 activation completes a novel fast-forward loop in vertebrate tissue remodeling.