Determining the specific role(s) of proteases in cell migration and invasion will require high-resolution imaging of sites of protease activity during live-cell migration through extracellular matrices. We have designed a novel fluorescent biosensor to detect localized extracellular sites of protease activity and to test requirements for matrix metalloprotease (MMP) function as cells migrate and invade three-dimensional collagen matrices. This probe fluoresces after cleavage of a peptide site present in interstitial collagen by a variety of proteases including MMP-2, -9, and -14 (MT1-MMP) without requiring transfection or modification of the cells being characterized. Using matrices derivatized with this biosensor, we show that protease activity is localized at the polarized leading edge of migrating tumor cells rather than further back on the cell body. This protease activity is essential for cell migration in native cross-linked but not pepsin-treated collagen matrices. The new type of high-resolution probe described in this study provides site-specific reporting of protease activity and insights into mechanisms by which cells migrate through extracellular matrices; it also helps to clarify discrepancies between previous studies regarding the contributions of proteases to metastasis.