Endostatin, an inhibitor of angiogenesis, is a 20 kDa fragment of the basement membrane protein, collagen XVIII. The formation of endostatin relies upon the action of proteases on collagen XVIII. TNFa, produced by activated macrophages, is a multifunctional proinflammatory cytokine with known effects on endothelial function. We postulated that TNFa may modulate the activities of proteases and thus regulate endostatin formation in pancreatic cells. Collagen XVIII/endostatin mRNA was expressed in one pancreatic cell line, SUIT-2, but not in BxPc-3. The 20 kDa endostatin was found in the cell-conditioned medium of SUIT-2 cells. Precursor forms only were found in the cells. Exogenous endostatin was degraded by cellular lysates of SUIT-2 cells. Elastase activity was found in cell extracts but not the cell-conditioned media of SUIT-2 cells. Incubation of SUIT-2 cells with TNFa increased intracellular elastase activity and also increased secretion of endostatin into the medium. We conclude that endostatin is released by SUIT-2 cells and that increases in intracellular elastase, induced by TNFa, are correlated with increased secretion. Endostatin is however susceptible to degradation by intracellular proteases and if tissue injury accompanies inflammation, endostatin may be degraded, allowing angiogenesis to occur.