Metastatic tumor cells that actively migrate and invade surrounding tissues rely on invadopodia to degrade extracellular matrix (ECM) barriers. Invadopodia are membrane protrusions that localize enzymes required for ECM degradation. Little is known about the formation, function, and regulation of invadopodia. Here, we show that invadopodia have two distinct aspects: (a) structural for organizing the cellular actin cytoskeleton to form membrane protrusions and (b) functional for using proteolytic enzyme(s) for ECM degradation. Small interfering RNA (siRNA) inhibition established that organization of invadopodia structure requires cortactin, whereas protease inhibitor studies identified membrane type 1 matrix metalloproteinase (MT1-MMP) as the key invadopodial enzyme responsible for gelatin matrix degradation in the breast carcinoma cell line MDA-MB-231. The inhibition of invadopodial structure assembly by cortactin depletion resulted in a block of matrix degradation due to failure of invadopodia formation. Either protease inhibition or MT1-MMP siRNA depletion moderately decreased the formation of invadopodial structures that were identified as actin-cortactin accumulations at the ventral cell membrane adherent to matrix. The invadopodia that were able to form upon MT1-MMP inhibition or depletion retained actin-cortactin accumulations but were unable to degrade matrix. Examination of cells at different time points as well as live-cell imaging revealed four distinct invadopodial stages: membrane cortactin aggregation at membranes adherent to matrix, MT1-MMP accumulation at the region of cortactin accumulation, matrix degradation at the invadopodia region, and subsequent cortactin dissociation from the area of continued MT1-MMP accumulation associated with foci of degraded matrix. Based on these results, we propose a stepwise model of invadopodia formation and function.