Brain-derived neurotrophic factor (BDNF) is secreted as either a mature furin-processed form or an unprocessed pro-form. Here, we characterise the extracellular processing of pro-BDNF by the serine protease plasmin. Using recombinant BDNF, maintained in the pro-form by site-directed mutagenesis or inhibition of furin, we demonstrate that plasmin (but not related proteases) is a specific and efficient activator of pro-BDNF. The proteolytic cleavage site is identified as Arg125-Val, within the consensus furin-cleavage motif (RVRR), generating an active form that stimulated neurite outgrowth on TrkB-transfected PC12 cells. Furthermore, we demonstrate that this processing can also occur in the pericellular environment by the action of cell-associated plasminogen activators.