Hepatocyte growth factor (HGF) is secreted as an inactive single-chain HGF (scHGF); however, only proteolytically processed two-chain HGF (tcHGF) can activate the MET receptor. We investigated the localization of tcHGF and activated/phosphorylated MET (pMET) using a tcHGF-specific antibody. In day 16.5 mouse embryos, total HGF (scHGF + tcHGF) was mainly localized in smooth muscle cells close to, but separate from, MET-positive epithelial cells in endodermal organs, including the stomach. In the adult stomach, total HGF was localized in smooth muscle cells, and tcHGF was mainly localized in the glandular base region. Immunostaining for pMET and Lgr5-driven green fluorescent protein (GFP) indicated that pMET localization overlapped with Lgr5+ gastric stem cells. HGF promoted organoid formation similar to EGF, indicating the potential for HGF to promote the survival and growth of gastric stem cells. pMET and tcHGF localizations changed during regeneration following gastric injury. These results indicate that MET is constantly activated in gastric stem cells and that the localization of pMET differs from the primary localization of precursor HGF but has a close relationship to tcHGF. Our results suggest the importance of the microenvironmental generation of tcHGF in the regulation of development, regeneration, and stem cell behavior.