Vascular endothelial growth factor-D (VEGF-D) binds and activates the endothelial cell tyrosine kinase receptors VEGF receptor-2 (VEGFR-2) and VEGF receptor-3 (VEGFR-3), is mitogenic for endothelial cells, and shares structural homology and receptor specificity with VEGF-C. The primary translation product of VEGF-D has long N- and C-terminal polypeptide extensions in addition to a central VEGF homology domain (VHD). The VHD of VEGF-D is sufficient to bind and activate VEGFR-2 and VEGFR-3. Here we report that VEGF-D is proteolytically processed to release the VHD. Studies in 293EBNA cells demonstrated that VEGF-D undergoes N- and C-terminal cleavage events to produce numerous secreted polypeptides including a fully processed form of M(r) ~21,000 consisting only of the VHD, which is predominantly a non-covalent dimer. Biosensor analysis demonstrated that the VHD has ~290- and ~40-fold greater affinity for VEGFR-2 and VEGFR-3, respectively, compared with unprocessed VEGF-D. In situ hybridization demonstrated that embryonic lung is a major site of expression of the VEGF-D gene. Processed forms of VEGF-D were detected in embryonic lung indicating that VEGF-D is proteolytically processed in vivo.