The membrane-type 1 matrix metalloproteinase (MT1-MMP) has been shown to be a key enzyme in tumor angiogenesis and metastasis. MT1-MMP hydrolyzes a variety of extracellular matrix components and is a physiological activator of pro-MMP-2, another MMP involved in malignancy. Pro-MMP-2 activation by MT1-MMP involves the formation of an MT1-MMP.tissue inhibitors of metalloproteinases 2 (TIMP-2). pro-MMP-2 complex on the cell surface that promotes the hydrolysis of pro-MMP-2 by a neighboring TIMP-2-free MT1-MMP. The MT1-MMP. TIMP-2 complex also serves to reduce the intermolecular autocatalytic turnover of MT1-MMP, resulting in accumulation of active MT1-MMP (57 kDa) on the cell surface. Evidence shown here in Timp2-null cells demonstrates that pro-MMP-2 activation by MT1-MMP requires TIMP-2. In contrast, a C-terminally deleted TIMP-2 (Delta-TIMP-2), unable to form ternary complex, had no effect. However, Delta-TIMP-2 and certain synthetic MMP inhibitors, which inhibit MT1-MMP autocatalysis, can act synergistically with TIMP-2 in the promotion of pro-MMP-2 activation by MT1-MMP. In contrast, TIMP-4, an efficient MT1-MMP inhibitor, had no synergistic effect. These studies suggest that under certain conditions the pericellular activity of MT1-MMP in the presence of TIMP-2 can be modulated by synthetic and natural (TIMP-4) MMP inhibitors.