Programmed cell death of the Müllerian duct eliminates the primitive female reproductive tract during normal male sexual differentiation. Müllerian inhibiting substance (MIS or AMH) triggers regression by propagating a BMP-like signaling pathway in the Müllerian mesenchyme that culminates in apoptosis of the Müllerian duct epithelium. Presently, the paracrine signal(s) used in this developmental event are undefined. We have identified a member of the matrix metalloproteinase gene family, Mmp2, as one of the first candidate target genes downstream of the MIS cascade to function as a paracrine death factor in Müllerian duct regression. Consistent with a role in regression, Mmp2 expression was significantly elevated in male but not female Müllerian duct mesenchyme. Furthermore, this sexually dimorphic expression of Mmp2 was extinguished in mice lacking the MIS ligand, suggesting strongly that Mmp2 expression is regulated by MIS signaling. Using rat organ genital ridge organ cultures, we found that inhibition of MMP2 activity prevented MIS-induced regression, whereas activation of MMP2 promoted ligand-independent Müllerian duct regression. Finally, MMP2 antisense experiments resulted in partial blockage of Müllerian duct regression. Based on our findings, we propose that similar to other developmental programs where selective elimination or remodeling of tissues occurs, localized induction of extracellular proteinases is critical for normal male urogenital development.