Insulin-like growth factor-binding protein-4 (IGFBP-4) is expressed in distinct regions in the rodent brain from the perinatal period into adulthood and is postulated to modulate the action of the insulin-like growth factors (IGFs) in vivo. This study was initiated to examine the regulation of IGF-binding protein-4 (IGFBP-4) in B104 cells, a rat neuronal cell line in which IGFBP-4 is the predominant secreted IGFBP. Exposure of B104 monolayer cultures to dexamethasone reduced native IGFBP-4 abundance to less than 10% of that in control medium by 48 h. Immunoblots showed that the decline in intact 24-kilodalton IGFBP-4 was accompanied by an increase in a 16-kilodalton immunoreactive fragment. In addition, IGFBP-4 proteolytic activity in medium was increased after exposure of the cells to dexamethasone. The protease was calcium dependent and appeared to be of the serine protease class, because activity could be inhibited by phenylmethylsulfonylfluoride and aprotinin, but not antipain, leupeptin, or pepstatin. Although the proteolytically modified IGFBP-4 retained the ability to bind IGFs, the affinities were approximately 13- and 20-fold lower for IGF-I and IGF-II, respectively. These data indicate that B104 cells produce an IGFBP-4 protease that is regulated by glucocorticoids. The actions of this protease reduce the affinity of IGFBP-4 for the IGFs without abolishing binding. Because both the IGFs and glucocorticoids have important roles in brain development, it is possible that some glucocorticoid actions in the brain could be mediated by proteolysis of IGFBP-4, which, in turn, would alter IGF action.