An imbalance between the proteolytic activity of matrix metalloproteinases (MMPs) and the activity of tissue inhibitors of metalloproteinases (TIMPs) is implicated in tissue injury during inflammation. The N-terminal cysteine of TIMP-1 plays a key role in the inhibitory activity of the protein because it coordinates the essential catalytic Zn2+ of the MMP, preventing the metal ion from functioning. An important mechanism for controlling the interaction of TIMPs with MMPs might involve hypochlorous acid (HOCl), a potent oxidant produced by the myeloperoxidase (MPO) system of phagocytes. Here, we show that HOCl generated by the MPO-H2O2-chloride system inactivates TIMP-1 by oxidizing its N-terminal cysteine. The product is a novel 2-oxo acid. Liquid chromatography-mass spectrometry and tandem mass spectrometry analyses demonstrated that methionine and N-terminal cysteine residues were rapidly oxidized by MPO-derived HOCl but only oxidation of the N-terminal cysteine of TIMP-1 correlated well with loss of inhibitory activity. Importantly, we detected the signature 2-oxo-acid N-terminal peptide in tryptic digests of bronchoalveolar lavage fluid from patients with acute respiratory distress syndrome, demonstrating that TIMP-1 oxidation occurs in vivo. Loss of the N-terminal amino group and disulfide structure are crucial for preventing TIMP-1 from inhibiting MMPs. Our findings suggest that pericellular production of HOCl by phagocytes is a pathogenic mechanism for impairing TIMP-1 activity during inflammation.