Proteases acting at the surface of cells generate and destroy receptor agonists and activate and inactivate receptors, thereby making a vitally important contribution to signal transduction. Certain serine proteases that derive from the circulation (e.g., coagulation factors), inflammatory cells (e.g., mast cell and neutrophil proteases), and from multiple other sources (e.g., epithelial cells, neurons, bacteria, fungi) can cleave protease-activated receptors (PARs), a family of four G protein-coupled receptors. Cleavage within the extracellular amino terminus exposes a tethered ligand domain, which binds to and activates the receptors to initiate multiple signaling cascades. Despite this irreversible mechanism of activation, signaling by PARs is efficiently terminated by receptor desensitization (receptor phosphorylation and uncoupling from G proteins) and downregulation (receptor degradation by cell-surface and lysosomal proteases). Protease signaling in tissues depends on the generation and release of proteases, availability of cofactors, presence of protease inhibitors, and activation and inactivation of PARs. Many proteases that activate PARs are produced during tissue damage, and PARs make important contributions to tissue responses to injury, including hemostasis, repair, cell survival, inflammation, and pain. Drugs that mimic or interfere with these processes are attractive therapies: selective agonists of PARs may facilitate healing, repair, and protection, whereas protease inhibitors and PAR antagonists can impede exacerbated inflammation and pain. Major future challenges will be to understand the role of proteases and PARs in physiological control mechanisms and human diseases and to develop selective agonists and antagonists that can be used to probe function and treat disease.