Apolipoprotein E (apoE) in a human fetal brain cDNA library was identified, using the expression cloning method, as a gene product that formed a complex with latent matrix metalloproteinase (MMP)-2. Co-expression of membrane-type MMP-1 (MT1-MMP) with apoE in HEK293T cells reduced the amount of apoE secreted into the culture medium, whereas cell-associated apoE core protein was not affected. Incubation of native apoE protein with recombinant MT1-MMP resulted in the cleavage of apoE. Recombinant apoE protein fused to glutathione S-transferase (apoE-GST) was cleaved by MT1-MMP at the following peptide bonds; T(85)-M(86), K(93)-S(94), R(246)-L(247), A(255)-E(256) and G(296)-L(297). HT1080 cells transfected with the apoE gene, which express endogenous MT1-MMP, secreted a low level of apoE protein and its cleaved fragments, and treatment with MMP inhibitor BB94 induced accumulation of apoE and retardation of cell proliferation. Addition of apoE-GST protein to the culture of HEK293T cells suppressed cell proliferation, and stable transfection of the MT1-MMP gene partly abrogated the suppression. These results suggest that cleavage of apoE protein by MT1-MMP abrogates apoE-mediated suppression of cell proliferation.