Dysregulation of matrix metalloproteinase (MMP) activity is implicated in tissue destruction under inflammatory conditions. An important mechanism controlling enzymatic activity might involve reactive oxygen species generated by phagocytes. Myeloperoxidase, a heme protein secreted by neutrophils, monocytes, and macrophages, uses hydrogen peroxide to generate hypochlorous acid (HOCl). We demonstrate that HOCl inhibits the activity of human matrilysin (MMP-7) in vitro, suggesting that it might limit proteolytic activity during inflammation. When MMP-7 was exposed to HOCl generated by myeloperoxidase, the proteinase lost activity. High performance liquid chromatographic analysis of the tryptic digest of the HOCl-treated proteinase demonstrated the absence of two peptides that were present in the untreated enzyme. Tandem mass spectrometric analysis revealed that both of the lost peptides contained methionine and tryptophan-glycine residues. The methionine residue of one of the peptides had been oxidized to methionine sulfoxide. In contrast, the major product from the other peptide was 4 atomic mass units smaller than its precursor (WG-4). This novel oxidation product was derived though modification of adjacent tryptophan and glycine residues in the catalytic domain of the enzyme. Loss of proteolytic activity was associated with conversion of the precursor peptide to WG-4 but not with methionine oxidation. In contrast, hydrogen peroxide failed to oxidize MMP-7 or to inactivate the enzyme. Thus, HOCl inactivates MMP-7, perhaps by site-specific conversion of tryptophan-glycine to WG-4. This inactivation mechanism is distinct from the well studied mechanisms involving tissue inhibitors of metalloproteinases. Our findings suggest that local pericellular production of HOCl by phagocytes is a physiological mechanism for governing MMP activity during inflammation.