Matrix metalloproteinases (MMPs) constitute a family of zinc-dependent proteolytic enzymes, which degrade several components of extracellular matrix, in arthritic synovial cells. In cultured synovial fibroblasts, both nitric oxide (NO) and reactive oxygen species (ROS) are potent inducers of MMPs production. PEP1261, a tetrapeptide derivative used in this study, corresponds to residues of 39-42 human lactoferrin. The parent protein lactoferrin is able to inhibit the production of free radicals in rheumatoid joints and it regulates many aspects of inflammation. This study is aimed to examine the effects of PEP1261 on MMP-2 production in the presence of nitric oxide donor in cultured synovial fibroblasts from collagen-induced arthritic rats. PEP1261 affects a significant reduction in nitrite levels as well as in MMP-2 production in SNAP stimulated synovial fibroblasts and this is validated by gelatin zymography and immunoblot analysis. Furthermore, RTPCR analysis has demonstrated that PEP1261 inhibits MMP-2 mRNA expression in SNAP treated synovial fibroblasts. The results of this study suggest that PEP1261 possesses antiarthritic activity by inhibiting nitrite levels as well as MMP-2 expression better than control peptides viz., KRDS and RGDS.