Members of the platelet-derived growth factor (PDGF) family are mitogens for cells of mesenchymal origin and have important functions during embryonic development, blood vessel maturation, fibrotic diseases and cancer. In contrast to the two classical PDGFs, the novel and less well-characterized members, PDGF-CC and PDGF-DD, are latent factors that need to be processed extracellularly by activating proteases, before they can mediate PDGF receptor activation. Here, we elucidate the structural requirements for urokinase plasminogen activator (uPA)-mediated activation of PDGF-DD, as well as the intricate interplay with uPA receptor (uPAR) signalling. Furthermore, we show that activated PDGF-DD, in comparison to latent, more potently transforms NIH/3T3 cells in vitro. Conversely, xenograft studies in nude mice demonstrate that cells expressing latent PDGF-DD are more tumorigenic than those expressing activated PDGF-DD. These findings imply that a fine-tuned proteolytic activation, in the local milieu, controls PDGF-DD bioavailability. Moreover, we suggest that proteolytic activation of PDGF-DD reveals a retention motif mediating interactions with pericellular components. Our proposed mechanism, where uPA not only generates active PDGF-DD, but also regulates its spatial distribution, provides novel insights into the biological function of PDGF-DD.