The processing of the fibrillar procollagen precursors to mature collagens is an essential requirement for fibril formation. The enzymes involved in these events are known as the procollagen N and C proteinases. The latter, which cleaves the C-propeptides of the fibrillar procollagens I-III, is identical to the previously described bone morphogenetic protein-1 (BMP-1). Surprisingly, unlike the other fibrillar collagens, the processing of the C-propeptide domain of the procollagen V homotrimer was found to be mediated by furin rather than BMP-1. However, the presence of putative BMP-1 cleavage sites in the α1(V) C-propeptide sequence prompted us to reconsider the procollagen V C-propeptide cleavage by BMP-1. Using a recombinant system to produce substantial amounts of the proα1(V) homotrimer, we have previously shown that the C-propeptide is spontaneously released in the culture medium. The trimeric C-propeptide fragment, resulting from the furin cleavage, still encompassed the predicted BMP-1 cleavage sites. It was purified and tested as a substrate for BMP-1. In parallel, the release of the C-propeptide in the culture medium was inhibited by the addition of a specific furin inhibitor, allowing the re-examination of BMP-1 activity on the intact molecule. We showed that BMP-1 does cleave both substrates at one of the two predicted C-proteinase cleavage sites. Our results favor a role for PCP/BMP-1 in physiological C-terminal processing of procollagen V and imply a general mechanism for fibrillar collagen C-terminal processing.