The tumor microenvironment is notably enriched with a broad spectrum of proteases. The proteolytic specificities of peptide substrates provide modular chemical tools for the rational design of cell-impermeable prodrugs that are specifically activated by proteases extracellularly in the tumor microenvironment. Targeting cell-impermeable prodrug activation to tumor microenvironment will significantly reduce drug toxicity to normal tissues. The activated prodrug attacks both tumor and stroma cells through a “bystander effect” without selectively deleting target-producing cells, therefore further minimizing resistance and toxicity. Here, we showed that legumain, the only asparaginyl endopeptidase of the mammalian genome, is highly expressed by neoplastic, stromal, and endothelial cells in solid tumors. Legumain is present extracellularly in the tumor microenvironment, associated with matrix as well as cell surfaces and functional locally in the reduced pH of the tumor microenvironment. A novel legumain-activated, cell-impermeable doxorubicin prodrug LEG-3 was designed to be activated exclusively in the tumor microenvironment. Upon administration, there is a profound increase of the end-product doxorubicin in nuclei of cells in tumors but little in other tissues. This tumor microenvironment–activated prodrug completely arrested growth of a variety of neoplasms, including multidrug-resistant tumor in vivo and significantly extended survival without evidence of myelosuppression or cardiac toxicity. The tumor microenvironment–activated prodrug design can be extended to other proteases and chemotherapeutic compounds and provides new potentials for the rational development of more effective functionally targeted cancer therapeutics. (Cancer Res 2006; 66(2): 970-80)