Tissue transglutaminase (TG2) is a ubiquitously expressed member of the transglutaminase family of Ca2+–dependent crosslinking enzymes. Unlike other family members, TG2 is a multifunctional protein, which has several other well documented enzymatic and non–enzymatic functions. A significant body of evidence accumulated over the last decade reveals multiple and complex activities of this protein on the cell surface and in the extracellular matrix (ECM), including its role in the regulation of cell–ECM interactions and outside–in signaling by several types of transmembrane receptors. Moreover, recent findings indicate a dynamic regulation of the levels and functions of extracellular TG2 by several complementary mechanisms. This review summarizes and assesses recent research into the emerging functions and regulation of extracellular TG2.