AbstractCells are regulated by many different means, and there is more and more evidence emerging that changes in the microenvironment greatly affect cell function. MT1‐MMP is a type I transmembrane proteinase which participates in pericellular proteolysis of extracellular matrix (ECM) macromolecules. The enzyme is cellular collagenase essential for skeletal development, cancer invasion, growth, and angiogenesis. MT1‐MMP promotes cell invasion and motility by pericellular ECM degradation, shedding of CD44 and syndecan1, and by activating ERK. Thus MT1‐MMP is one of the factors that influence the cellular microenvironment and thereby affect cell‐signaling pathways and eventually alters cellular behavior. As a proteinase, MT1‐MMP is regulated by inhibitors, but it also requires formation of a homo‐oligomer complex, localization to migration front of the cells, and internalization to become a “functionally active” cell function modifier. Developing new means to inhibit “functional activity” of MT1‐MMP may be a new direction to establish treatments for the diseases that MT1‐MMP mediates such as cancer and rheumatoid arthritis. © 2005 Wiley‐Liss, Inc.