Matrix metalloproteinases (MMPs) are important for developmental tissue remodeling and for the inflammatory response. Although the vertebrate MMP family is large and functionally redundant, the fruitfly Drosophila melanogaster has only two MMPs, both essential genes. Our previous work demonstrated that Mmp1 is required for growth of the tracheal system, and we suggested that the mutant phenotype resulted from aberrant persistence of cell adhesion to the extracellular matrix. Here we report the identification of NijA, a transmembrane protein whose vertebrate homologs regulate cell adhesion, as a two-hybrid binding partner for Mmp1. The binding of Mmp1 and NijA was confirmed by coimmunoprecipitation of endogenous proteins from flies, and the endogenous proteins were found to colocalize at the tracheal cell surface in larvae. When NijA is expressed in S2 cells, they lose adhesion to surfaces; this adhesion-loss phenotype is dependent on the expression and catalytic activity of Mmp1. Our data indicate that Mmp1 releases the N-terminal extracellular domain of NijA. This liberated ectodomain promotes the loss of cell adhesion in a cell-nonautonomous manner. We suggest that tracheal cell adhesion is regulated by a novel mechanism utilizing an MMP and a ninjurin family member.