Transforming growth factor-β (TGFβ) is a dimeric peptide growth factor which regulates cellular differentiation and proliferation during development. Most cells secrete TGFβ as a large latent TGFβ complex containing mature TGFβ, latency associated peptide, and latent TGFβ-binding protein (LTBP)-1. The biological role of LTBP-1 in development remains unclear. Using a polyclonal antiserum specific for LTBP-1 (Ab39) and three-dimensional collagen gel culture assay of embryonic heart, we examined the tissue distribution of LTBP-1 and its functional role during the formation of endocardial cushion tissue in the mouse embryonic heart. Mature TGFβ protein was required at the onset of the endothelial-mesenchymal transformation to initiate endocardial cushion tissue formation. Double antibody staining showed that LTBP-1 colocalized with TGFβ1 as an extracellular fibrillar structure surrounding the endocardial cushion mesenchymal cells. Immunogold electronmicroscopy showed that LTBP-1 localized to 40–100 nm extracellular fibrillar structure and 5–10-nm microfibrils. The anti–LTBP-1 antiserum (Ab39) inhibited the endothelial-mesenchymal transformation in atrio-ventricular endocardial cells cocultured with associated myocardium on a three-dimensional collagen gel lattice. This inhibitory effect was reversed by administration of mature TGFβ proteins in culture. These results suggest that LTBP-1 exists as an extracellular fibrillar structure and plays a role in the storage of TGFβ as a large latent TGFβ complex.