The recently identified vascular endothelial growth factor C (VEGF-C) belongs to the platelet-derived growth factor (PDGF)/VEGF family of growth factors and is a ligand for the endothelial-specific receptor tyrosine kinases VEGFR-3 and VEGFR-2. The VEGF homology domain spans only about one-third of the cysteine-rich VEGF-C precursor. Here we have analysed the role of post-translational processing in VEGF-C secretion and function, as well as the structure of the mature VEGF-C. The stepwise proteolytic processing of VEGF-C generated several VEGF-C forms with increased activity towards VEGFR-3, but only the fully processed VEGF-C could activate VEGFR-2. Recombinant 'mature' VEGF-C made in yeast bound VEGFR-3 (K[D] = 135 pM) and VEGFR-2 (K[D] = 410 pM) and activated these receptors. Like VEGF, mature VEGF-C increased vascular permeability, as well as the migration and proliferation of endothelial cells. Unlike other members of the PDGF/VEGF family, mature VEGF-C formed mostly non-covalent homodimers. These data implicate proteolytic processing as a regulator of VEGF-C activity, and reveal novel structure-function relationships in the PDGF/VEGF family.