Gelatinase A and membrane-type metalloproteinase (MT1-MMP) were able to process human procollagenase-3 (Mr 60,000) to the fully active enzyme (Tyr85 N terminus; Mr 48,000). MT1-MMP activated procollagenase-3 via a Mr 56,000 intermediate (Ile36 N terminus) to 48,000 which was the result of the cleavage of the Glu84-Tyr85 peptide bond. We have established that the activation rate of procollagenase-3 by MT1-MMP was enhanced in the presence of progelatinase A, thereby demonstrating a unique new activation cascade consisting of three members of the matrix metalloproteinase family. In addition, procollagenase-3 can be activated by plasmin, which cleaved the Lys38-Glu39 and Arg76-Cys77 peptide bonds in the propeptide domain. Autoproteolysis then resulted in the release of the rest of the propeptide domain generating Tyr85 N-terminal active collagenase-3. However, plasmin cleaved the C-terminal domain of collagenase-3 which results in the loss of its collagenolytic activity. Concanavalin A-stimulated fibroblasts expressing MT1-MMP and fibroblast-derived plasma membranes were able to process human procollagenase-3 via a Mr 56,000 intermediate form to the final Mr 48,000 active enzyme which, by analogy with progelatinase A activation, may represent a model system for in vivo activation. Inhibition experiments using tissue inhibitor of metalloproteinases, plasminogen activator inhibitor-2, or aprotinin demonstrated that activation in the cellular model system was due to MT1-MMP/gelatinase A and excluded the participation of serine proteinases such as plasmin during procollagenase-3 activation. We have established that progelatinase A can considerably potentiate the activation rate of procollagenase-3 by crude plasma membrane preparations from concanavalin A-stimulated fibroblasts, thus confirming our results using purified progelatinase A and MT1-MMP. This new activation cascade may be significant in human breast cancer pathology, where all three enzymes have been implicated as playing important roles.