Human endometase/matrilysin-2/matrix metalloproteinase-26 (MMP-26) is a novel epithelial and cancer-specific metalloproteinase. Peptide libraries were used to profile the substrate specificity of MMP-26 from the P4-P4' sites. The optimal cleavage motifs for MMP-26 were Lys-Pro-Ile/Leu-Ser(P1)-Leu/Met(P1')-Ile/Thr-Ser/Ala-Ser. The strongest preference was observed at the P1' and P2 sites where hydrophobic residues were favored. Proline was preferred at P3, and Serine was preferred at P1. The overall specificity was similar to that of other MMPs with the exception that more flexibility was observed at P1, P2', and P3'. Accordingly, synthetic inhibitors of gelatinases and collagenases inhibited MMP-26 with similar efficacy. A pair of stereoisomers had only a 40-fold difference in K(i)(app) values against MMP-26 compared with a 250-fold difference against neutrophil collagenase, indicating that MMP-26 is less stereoselective for its inhibitors. MMP-26 autodigested itself during the folding process. Two of the major autolytic sites were Leu(49)-Thr(50) and Ala(75)-Leu(76), which still left the cysteine switch sequence (PHC(82)GVPD) intact. This suggests that Cys(82) may not play a role in the latency of the zymogen. Interestingly, inhibitor titration studies revealed that only approximately 5% of the total MMP-26 molecules was catalytically active, indicating that the thiol groups of Cys(82) in the active molecules may be dissociated or removed from the active site zinc ions. MMP-26 cleaved Phe(352)-Leu(353) and Pro(357)-Met(358) in the reactive loop of alpha(1)-proteinase inhibitor and His(140)-Val(141) in insulin-like growth factor-binding protein-1, probably rendering these substrates inactive. Among the fluorescent peptide substrates analyzed, Mca-Pro-Leu-Ala-Nva-Dpa-Ala-Arg-NH(2) displayed the highest specificity constant (30,000/molar second) with MMP-26. This report proposes a working model for the future studies of pro-MMP-26 activation, the design of inhibitors, and the identification of optimal physiological and pathological substrates of MMP-26 in vivo.