Discoidin domain receptor 2 (DDR2) is a kind of protein tyrosine kinases associated with cell proliferation and tumor metastasis, and collagen, a ligand for DDR2, up-regulates matrix metalloproteinase 1 (MMP-1) and MMP-2 expression in extracellular matrix (ECM). To investigate the role of DDR2 in cartilage destruction in rheumatoid arthritis (RA), we expressed the extracellular domain (ECD) of DDR2 (without signal peptide and transmembrane domain, designated DR) in insect cells, purified and characterized DR, hoping to use it as a specific antagonist of DDR2. By using Bac-To-Bac Expression System with a His tag, we successfully obtained the recombinant bacularvirus containing DDR2 ECD, purified it and characterized its function. The soluble fraction of DR was about 12% of the total fused protein. After chromatographic purification, DR with 92% purity was obtained. Competitive inhibition assay demonstrated that DR blocked the binding between DDR2 and natural DDR2 receptors on NIH3T3 and synovial cells. Results of RT-PCR, Western blotting, and gelatinase zymography showed that DR was capable of inhibiting MMP-1 and MMP-2 secretion from NIH3T3 and RA synoviocytes stimulated by collagen II. For MMP-1, inhibition was displayed at the levels of mRNA and protein, whereas for MMP-2 it was at the level of protein. These findings suggested that the expressed DR inhibited the activity of natural DDR2 and relevant MMP-1 and MMP-2 expression in RA synoviocytes and NIH3T3 cells provoked by collagen II.