Matrix metalloproteinases (MMPs) are secretory endopeptidases. They have been associated with invasion by cancer-cell and metastasis. Previous studies have demonstrated that proteolytic activity could be detected using fluorescence resonance energy transfer (FRET) with mutants of GFP. To monitor MMP activity, we constructed vectors that encoded a MMP Substrate Site (MSS) between YFP and CFP. In vitro, YFP-MSS-CFP can be used to detect MMP activity and 1,10-phenathroline inhibition of MMP activity. In living cells, MMPs are secreted proteins and act outside of the cell, and therefore YFP-MSS-CFPdisplay was anchored on the cellular surface to detect extracellular MMP. A pDisplay-YC vector expressing the YFP-MSS-CFPdisplay on the cellular surface was transfected into MCF-7 cells that expressed low levels of MMP. Efficient transfer of energy from excited CFP to YFP within the YFP-MSS-CFPdisplay molecule was observed, and real-time FRET was declined when MCF-7 was incubated with MMP2. However, no such transfer of energy was detected in the YFP-MSS-CFPdisplay expressing MDA-MB 435s cells, in which high secretory MMP2 were expressed. The FRET sensor YFP-MSS-CFPdisplay can sensitively and reliably monitor MMP activation in living cells and can be used for high-throughput screening of MMP inhibitors for anti-cancer treatments.