The cDNA of a novel matrix metalloproteinase, collagenase-3 (MMP-13) has been isolated from a breast tumor library (Freije, J. M. P., Dicz-Itza, I., Balbin, M., Sanchez, L. M., Blasco, R., Tolivia, J., and López-Otin, C. (1994) J. Biol. Chem. 269, 16766-16773), and a potential role in tumor progression has been proposed for this enzyme. In order to establish the possible role of collagenase-3 in connective tissue turnover, we have expressed and purified recombinant human procollagenase-3 and characterized the enzyme biochemically. The purified procollagenase-3 was shown to be glycosylated and displayed a M(r) of 60,000, the N-terminal sequence being LPLPSGGD, which is consistent with the cDNA-predicted sequence. The proenzyme was activated by p-aminophenylmercuric acetate or stromelysin, yielding an intermediate form of M(r) 50,000, which displayed the N-terminal sequence L58EVTGK. Further processing resulted in cleavage of the Glu84-Tyr85 peptide bond to the final active enzyme (M(r) 48,000). Trypsin activation of procollagenase-3 also generated a Tyr85 N terminus, but it was evident that the C-terminal domain was rapidly lost, and hence the collagenolytic activity diminished. Analysis of the substrate specificity of collagenase-3 revealed that soluble type II collagen was preferentially hydrolyzed, while the enzyme was 5 or 6 times less efficient at cleaving type I or III collagen. Fibrillar type I collagen was cleaved with comparable efficiency to the fibroblast and neutrophil collagenases (MMP-1 and MMP-8), respectively. Unlike these collagenases, gelatin and the peptide substrates Mea-Pro-Leu-Gly-Leu-Dpa-Ala-Arg-NH2 and Mca-Pro-Cha-Gly-Nva-His-Ala-Dpa-NH2 were efficiently hydrolyzed as well, as would be predicted from the similarities between the active site sequence of collagenase-3 (MMP-13) and the gelatinases A and B. Active collagenase-3 was inhibited in a 1:1 stoichiometric fashion by the tissue inhibitors of metalloproteinases, TIMP-1, TIMP-2, and TIMP-3. These results suggest that in vivo collagenase-3 could play a significant role in the turnover of connective tissue matrix constituents.