The progressive accumulation of beta-amyloid (Abeta) in senile plaques and in the cerebral vasculature is the hallmark of Alzheimer's disease and related disorders. Degradation of Abeta by specific proteolytic enzymes is an important process that regulates its levels in brain. Matrix metalloproteinase 2 (MMP2) was shown to be expressed in reactive astrocytes surrounding amyloid plaques and may contribute to Abeta degradation. Membrane type 1 (MT1) MMP is the physiological activator for the zymogen pro-MMP2. Here, we show that, in addition to MMP2, its activator MT1-MMP is also expressed in reactive astrocytes in regions with amyloid deposits in transgenic mice. Using a Cos-1 cell expression system, we demonstrated that MT1-MMP can degrade exogenous Abeta40 and Abeta42. A purified soluble form of MT1-MMP degraded both soluble and fibrillar Abeta peptides in a time-dependent manner, yielding specific degradation products. Mass spectrometry analysis identified multiple MT1-MMP cleavage sites on soluble Abeta40 and Abeta42. MT1-MMP-mediated Abeta degradation was inhibited with the general MMP inhibitor GM6001 or the specific MT1-MMP inhibitor tissue inhibitor of metalloproteinases 2. Furthermore, in situ experiments showed that purified MT1-MMP degraded parenchymal fibrillar amyloid plaques that form in the brains of Abeta precursor protein transgenic mice. Together, these findings indicate that MT1-MMP possesses Abeta degrading activity in vitro.