Cashew nut shell liquid (CNSL) has been used in traditional medicine for the treatment of a wide variety of pathophysiological conditions. To further define the mechanism of CNSL action, we investigated the effect of cashew nut shell extract (CNSE) on two matrix metalloproteinases, MMP-2/gelatinase A and MMP-9/gelatinase B, which are known to have critical roles in several disease states. We observed that the major constituent of CNSE, anacardic acid, markedly inhibited the gelatinase activity of 3T3-L1 cells. Our gelatin zymography studies on these two secreted gelatinases, present in the conditioned media from 3T3-L1 cells, established that anacardic acid directly inhibited the catalytic activities of both MMP-2 and MMP-9. Our docking studies suggested that anacardic acid binds into the MMP-2/9 active site, with the carboxylate group of anacardic acid chelating the catalytic zinc ion and forming a hydrogen bond to a key catalytic glutamate side chain and the C15 aliphatic group being accommodated within the relatively large S1' pocket of these gelatinases. In agreement with the docking results, our fluorescence-based studies on the recombinant MMP-2 catalytic core domain demonstrated that anacardic acid directly inhibits substrate peptide cleavage in a dose-dependent manner, with an IC₅₀ of 11.11 μM. In addition, our gelatinase zymography and fluorescence data confirmed that the cardol-cardanol mixture, salicylic acid, and aspirin, all of which lack key functional groups present in anacardic acid, are much weaker MMP-2/MMP-9 inhibitors. Our results provide the first evidence for inhibition of gelatinase catalytic activity by anacardic acid, providing a novel template for drug discovery and a molecular mechanism potentially involved in CNSL therapeutic action.