Matrix metalloproteinases (MMPs) function in the remodeling of the extracellular matrix that is integral for many normal and pathological processes. The tissue inhibitor of metalloproteinases family, including tissue inhibitor of metalloproteinases-2 (TIMP-2), regulates the activity of these multifunctional metalloproteinases. TIMP family members are proteinase inhibitors that contain six conserved disulfide bonds, one involving an amino-terminal cysteine residue that is critical for MMP inhibitor activity. TIMP-2 has been expressed in Escherichia coli, folded from insoluble protein, and functionally characterized. The wild type protein inhibited gelatinase A (MMP-2), whereas a variant with an alanine appended to the amino terminus (Ala+TIMP-2) was inactive. Removal of amino-terminal alanine by exopeptidase digestion restored protease inhibitor activity. This confirms the mechanistic importance of the amino-terminal amino group in the metalloproteinase inhibitory activity, as originally suggested from the x-ray structure of a complex of MMP-3 with TIMP-1 and a complex of TIMP-2 with MT-1-MMP. The Ala+TIMP-2 variant exhibited conformational, pro-MMP-2 complex formation and fibroblast growth modulating properties of the wild type protein. These findings demonstrate that Ala+TIMP-2 is an excellent biochemical tool for examining the specific role of MMP inhibition in the multiple functions ascribed to TIMPs.