Supernatants from the P388D1 murine macrophage cell line as well as commercially prepared human interleukin-1 (IL-1) stimulated primary rabbit articular chondrocytes to produce collagen- and proteoglycan-degrading proteases. The P388D1-derived factor had a molecular weight of 16,000-20,000 and a pI of 4.5-5.0, and was sensitive to phenylglyoxal treatment. Human IL-1 and the P388D1 supernatants enhanced glycosaminoglycan (GAG) release from bovine nasal cartilage explants. The proteoglycan- and collagen-degrading proteases required Ca2+ for activity. Latent proteoglycanase and collagenase had molecular weights of 44,000-56,500 and 34,000-44,000, respectively. The activated proteases had molecular weights of 30,000-40,000 and 22,000-36,000, respectively. Heparin-Sepharose affinity chromatography yielded two latent proteoglycanase-degrading protease activities and a collagen-degrading peak. The two proteoglycanase peaks also degraded fibronectin, laminin, gelatin, and azocoll but not type I collagen. The collagenase peak also degraded proteoglycan, gelatin, fibronectin, laminin, and azocoll. The activity of the proteoglycan- and collagen-degrading peaks was inhibited by phenanthroline and alpha 2-macroglobulin but not by phenylmethylsulfonylfluoride (PMSF), tosyllysylchloromethylketone (TLCK), pepstatin, or alpha 1-antitrypsin. The control of factors which augment protease production may offer a novel therapeutic approach to arthritis.