Thioredoxin (Trx) inhibited tissue inhibitor of metalloproteinase (TIMP)-1 and TIMP-2 activity with an approximate IC50 of 0.3 microM, matrix metalloproteinase (MMP)-2 activity with an approximate IC50 of 2 microM but did not inhibit MMP-9 activity. This differential capacity of Trx to inhibit TIMP and MMP activity resulted in the promotion of MMP-2 and MMP-9 activity in the presence of molar TIMP excess. Inhibition of TIMP and MMP-2 activity by Trx was dependent upon thioredoxin reductase (TrxR), was abolished by Trx catalytic site mutation and did not result from TIMP or MMP-2 degradation. HepG2 hepatocellular carcinoma cells induced to secrete Trx inhibited TIMP activity in the presence of TrxR. SK-N-SH neuroblastoma cells secreted TrxR, which inhibited TIMP and MMP-2 activity in the presence of Trx. Trx stimulated SK-N-SH invasive capacity in vitro in the absence of exogenous TrxR. This study therefore identifies a novel extracellular role for the thioredoxin/thioredoxin reductase redox system in the differential inhibition of TIMP and MMP activity and provides a novel mechanism for altering the TIMP/MMP balance that is of potential relevance to tumor invasion.