In our attempt to study the role of matrix metalloproteinases (MMPs) in the process of mammalian ovulation, we isolated a rat ortholog of the recently reported human MMP-23 from gonadotropin-primed immature rat ovaries. Transient expression of epitope-tagged rat and human MMP-23 in COS-1 cells revealed that they were synthesized as a membrane-anchored glycoprotein with type II topology. Indirect immunofluorescent analysis showed that subcellular localization of MMP-23 was predominantly in the perinuclear regions. The transfected human MMP-23 protein was processed endogenously to the soluble form in COS-1 cells. However, cotransfection of MMP-23 with the mouse furin cDNA did not enhance this processing, indicating that furin may not be involved in this event. Notably, in situ hybridization analysis revealed a dramatic switching of MMP-23 mRNA localization from granulosa cells to theca-externa/fibroblasts and ovarian surface epithelium during the follicular development. In serum-free primary culture of rat granulosa cells, a drastic diminution of MMP-23 mRNA expression was observed in response to FSH action between 24 h and 48 h of culture. The observed effect of FSH on MMP-23 expression was mimicked by treatment of granulosa cells with forskolin or 8-bromo (Br)-cAMP. In contrast, MMP-23 mRNA levels increased in theca-interstitial cells regardless of the presence of LH in the culture. However, treatment of theca-interstitial cells with forskolin or 8-Br-cAMP markedly reduced the expression of MMP-23 with a concomitant increase in progesterone production. These results indicate that the MMP-23 gene is spatially and temporally regulated in a cell type-specific manner in ovary via the cAMP signaling pathway.