Type I collagen provokes activation of hepatic stellate cells during liver injury through mechanisms that have been unclear. Here, we tested the role of the discoidin domain tyrosine kinase receptor 2 (DDR2), which signals in response to type I collagen, in this pathway. DDR2 mRNA and protein are induced in stellate cells activated by primary culture or in vivo during liver injury. The receptor becomes tyrosine phosphorylated in response to either endogenous or exogenous type I collagen, whereas its expression is downregulated during cellular quiescence induced by growth on Matrigel. We developed stellate cell lines stably overexpressing either wild-type DDR2, a constitutively active chimeric DDR2 receptor (Fc-DDR2), a truncated receptor expressing the extracellular domain, or a kinase-dead DDR2 Cells overexpressing DDR2 showed enhanced proliferation and invasion through Matrigel, activities that were directly related to increased expression of active matrix metalloproteinase 2 (MMP-2). These data show that DDR2 is induced during stellate cell activation and implicate the phosphorylated receptor as a mediator of MMP-2 release and growth stimulation in response to type I collagen. Moreover, type I collagen-dependent upregulation of DDR2 expression establishes a positive feedback loop in activated stellate cells, leading to further proliferation and enhanced invasive activity.