Membrane type 1 (MT1) matrix metalloproteinase (MMP-14) is a membrane-tethered MMP considered to be a major mediator of pericellular proteolysis. MT1-MMP is regulated by a complex array of mechanisms, including processing and endocytosis that determine the pool of active proteases on the plasma membrane. Autocatalytic processing of active MT1-MMP generates an inactive membrane-tethered 44-kDa product (44-MT1) lacking the catalytic domain. This form preserves all other enzyme domains and is retained at the cell surface. Paradoxically, accumulation of the 44-kDa form has been associated with increased enzymatic activity. Here we report that expression of a recombinant 44-MT1 (Gly(285)-Val(582)) in HT1080 fibrosarcoma cells results in enhanced pro-MMP-2 activation, proliferation within a three-dimensional collagen I matrix, and tumor growth and lung metastasis in mice. Stimulation of pro-MMP-2 activation and growth in collagen I was also observed in other cell systems. Expression of 44-MT1 in HT1080 cells is associated with a delay in the rate of active MT1-MMP endocytosis resulting in higher levels of active enzyme at the cell surface. Consistently, deletion of the cytosolic domain obliterates the stimulatory effects of 44-MT1 on MT1-MMP activity. In contrast, deletion of the hinge turns the 44-MT1 form into a negative regulator of enzyme function in vitro and in vivo, suggesting a key role for the hinge region in the functional relationship between active and processed MT1-MMP. Together, these results suggest a novel role for the 44-kDa form of MT1-MMP generated during autocatalytic processing in maintaining the pool of active enzyme at the cell surface.