Matrix metalloproteinases (MMPs) have been proposed to remodel the extracellular environment of neurons. Here, we report that the metalloproteinase membrane-type 5 MMP (MT5-MMP) binds to AMPA receptor binding protein (ABP) and GRIP (glutamate receptor interaction protein), two related postsynaptic density (PSD) PDZ (postsynaptic density-95/Discs large/zona occludens-1) domain proteins that target AMPA receptors to synapses. The MT5-MMP C terminus binds ABP PDZ5 and the two proteins coimmunoprecipitated and colocalized in heterologous cells and neurons. MT5-MMP localized in filopodia at the tips of growth cones in young [2–5 din vitro(DIV)] cultured embryonic hippocampal neurons, and at synapses in mature (21 DIV) neurons. Its enrichment in synaptosomes also indicated a synaptic localization in the mature brain. Deletion of the PDZ binding site impaired membrane trafficking of MT5-MMP, whereas exogenous ABP splice forms that are associated either with the plasma membrane or with the cytosol, respectively, colocalized with MT5-MMP in synaptic spines or recruited MT5-MMP to intracellular compartments. We show that endogenous MT5-MMP is found in cultured neurons and brain lysates in a proenzyme form that is activated by furin and degraded by auto-proteolysis. We also identify cadherins as MT5-MMP substrates. These results suggest that ABP directs MT5-MMP proteolytic activity to growth cones and synaptic sites in neurons, where it may regulate axon pathfinding or synapse remodeling through proteolysis of cadherins or other ECM or cell adhesion molecules.