CDMP1/GDF5 has not demonstrated biological activity inXenopus embryos when overexpressed by mRNA injection. We provide biological and biochemical evidence that to become active, the protein requires cleavage by two distinct proteolytic enzymes. We demonstrate a specific overlap in the expression patterns of CDMP1/GDF5 with the proteases required to release the mature peptide at the location of the future articular surface but not in the future joint space. Taken together, these observations provide a plausible mechanism for local action of CDMP1/GDF5 consistent with requirements imposed by current models of pattern formation in the developing limb.As clinical applications of cellular therapies and engineered tissues become more widespread, improved understanding of the molecular processes underlying their mode of action will be needed. Greater biological insight will be important not only for devising improved therapeutic approaches but also for refining manufacturing processes and testing of therapeutic products to achieve consistently high quality. This has particular relevance to joint resurfacing and repair, an area of increasing interest for potential therapeutic interventions. (see, for example, www.