MT3-MMP, a membrane-anchored matrix metalloproteinase, has been proposed to participate in the remodeling of extracellular matrix either by direct proteolysis or via activating other enzymes such as progelatinase A. To test this hypothesis, we analyzed the effect of exogenously transfected MT3-MMP in a tissue remodeling system: growth and tubulogenesis of Madin-Darby canine kidney (MDCK) cells in collagen gels. Although the parental cells require MMP activities for both growth and tubulogenesis, over-expression of wild-type MT3-MMP, but not its catalytically inactive mutant, leads to further enhancement of both processes, independent of its downstream substrate, progelatinase A. Mechanistically, MT3-MMP accomplishes such an effect by displaying on cell surfaces as active species, ready to activate progelatinase A or degrade ECM molecules. These data strongly suggest that MT3-MMP possesses the potential to directly enhance the growth and invasiveness of cells in vivo, two critical processes for development and carcinogenesis.