Proprotein convertases play an important role in tumorigenesis and invasiveness. Here, we report that a dibasic amino acid convertase, furin, directly cleaves proMMP-2 within the trans-Golgi network leading to an inactive form of matrix metalloproteinase-2 (MMP-2). Co-transfection of COS-1 cells with both proMMP-2 and furin cDNAs resulted in the cleavage of the N-terminal propeptide of proMMP-2. The molecular mass of cleaved MMP-2 (63 kDa), detected in both cell lysates and conditioned medium, is between the intermediate and fully activated forms of MMP-2 induced by membrane type 1-MMP. Furin-cleaved MMP-2 does not possess proteolytic activity as examined in a cell-free assay. Treatment of transfected cells with a furin inhibitor resulted in a dose-dependent inhibition of proMMP-2 cleavage; recombinant tissue inhibitor of metalloproteinase-2, which binds to the active site of membrane type 1-MMP, had no inhibitory effect. Site-directed mutagenesis of amino acids in the furin consensus recognition motif of proMMP-2(R69KPR72) prevented propeptide cleavage, thereby identifying the scissile bond and characterizing the basic amino acids required for cleavage. Other experimental observations were consistent with intracellular furin cleavage of proMMP-2 in the trans-Golgi network. The furin cleavage site in other proMMPs was examined. MMP-3, which contains the RXXR furin consensus sequence, was cleaved in furin co-transfected cells, whereas MMP-1, which lacks an RXXR consensus sequence, was not cleaved. In conclusion, we report the novel observation that furin can directly cleave the RXXR amino acid sequence in the propeptide domain of proMMP-2 leading to inactivation of the enzyme.