Tissue transglutaminase (TG2) is a ubiquitous enzyme that cross-links glutamine residues with lysine residues, resulting in protein polymerization, cross-linking of dissimilar proteins, and incorporation of diamines and polyamines into proteins. It has not previously been known to have kinase activity. Recently, insulin-like growth factor-binding protein-3 (IGFBP-3) has been reported to be phosphorylated by breast cancer cell membranes. We purified the IGFBP-3 kinase activity from solubilized T47D breast cancer cell membranes using gel filtration, ion-exchange chromatography, and IGFBP-3 affinity chromatography. The fractions containing kinase activity were further purified by high pressure liquid chromatography and analyzed by tandem mass spectroscopy. TG2 was detected in fractions containing kinase activity. Antisera to TG2 and protein A-Sepharose were used to immunoprecipitate TG2 from membrane fractions. The immunoprecipitates retained IGFBP-3 kinase, whereas immunoprecipitation deleted kinase activity in the membrane supernatant. The inhibitors of TG2, cystamine and monodansyl cadaverine, abolished the ability of the T47D cell membrane preparation to phosphorylate IGFBP-3. Both TG2 purified from guinea pig liver and recombinant human TG2 expressed in insect cells were able to phosphorylate IGFBP-3. TG2 kinase activity was inhibited in a concentration-dependent fashion by calcium, which has previously been shown to be important for the cross-linking activity of TG2. These data provide compelling evidence that TG2 has intrinsic kinase activity, a function that has not previously been ascribed to TG2. Furthermore, we provide evidence that TG2 is a major component of the IGFBP-3 kinase activity present on breast cancer cell membranes.