Considerable evidence has associated the expression of matrix metalloproteinases (MMPs) with the degradation of cartilage and bone in chronic conditions such as arthritis. Direct evaluation of MMPs' role in vivo has awaited the development of MMP inhibitors with appropriate pharmacological properties. We have identified butanediamide, N4-hydroxy-2-(2-methylpropyl)-N1-[2-[[2-(morpholinyl)ethyl]-,[S- (R*,S*)] (GI168) as a potent MMP inhibitor with sufficient solubility and stability to permit evaluation in an experimental model of chronic destructive arthritis (adjuvant-induced arthritis) in rats. In this model, pronounced acute and chronic synovial inflammation, distal tibia and metatarsal marrow hyperplasia associated with osteoclasia, severe bone and cartilage destruction, and ectopic new bone growth are well developed by 3 wk after adjuvant injection. Rats were injected with Freund's adjuvant on day 0. GI168 was was administered systemically from days 8 to 21 by osmotic minipumps implanted subcutaneously. GI168 at 6, 12, and 25 mg/kg per d reduced ankle swelling in a dose-related fashion. Radiological and histological ankle joint evaluation on day 22 revealed a profound dose related inhibition of bone and cartilage destruction in treated rats relative to rats receiving vehicle alone. A significant reduction in edema, pannus formation, periosteal new bone growth and the numbers of adherent marrow osteoclasts was also noted. However, no significant decrease in polymorphonuclear and mononuclear leukocyte infiltration of synovium and marrow hematopoietic cellularity was seen. This unique profile of antiarthritic activity indicates that GI168 is osteo- and chondro-protective, and it supports a direct role for MMP in cartilage and bone damage and pannus formation in adjuvant-induced arthritis.