Subcutaneously implanted disks of hexamethylenediisocyanate or glutaraldehyde cross-linked sheep collagen (referred to as HDSC and GDSC, respectively) in mice show large differences in degradation rate. Although comparable numbers of macrophages are seen in HDSC and GDSC, phagocytosis of collagen by macrophages occurred only in GDSC. The molecular mechanisms involved in the phagocytosis of collagen by macrophages are essentially unknown. Immunofluorescence and RT-PCR showed that Endo180 was expressed in GDSC only. TissueFaxs showed that Endo180 co-localized with MT1-MMP on F4÷80 positive cells, which is likely responsible for the phagocytosis in GDSC. RT-PCR further showed that Endo180 expression correlated with high levels of IFN-γ mRNA. In vitro, IFN-γ induced the expression Endo180 and MT1-MMP in murine macrophages cultured on collagen type I (although too high levels of IFN-γ dampened the expression of Endo180 and MT1-MMP). Moreover, the expression of Endo180 and MT1-MMP induced by IFN-γ can be inhibited through IL-10. The differences in microenvironment between GDSC and HDSC (high IFN-γ and low IL-10 levels in GDSC, low IFN-γ and high IL-10 levels in HDSC) provide an explanation why phagocytosis of collagen by macrophages is only seen in GDSC. In summary, we show for the first time that the IFN-γ dependent co-expression of Endo180 and MT1-MMP on macrophages coincides with collagen phagocytosis, thus providing evidence that the mechanism of collagen phagocytosis operating in the foreign body reaction by macrophages is comparable with the mechanism of intracellular collagen degradation by fibroblasts seen under physiological conditions.