We examined the mechanism regulating intercellular cell adhesion molecule-1 (ICAM-1)-dependent monocyte transendothelial migration. Monocyte migration through endothelial cells expressing ICAM-1 alone was comparable to that of tumor necrosis factor-alpha-treated cells. Transmigration was reduced in ICAM-1 lacking the cytoplasmic tail and in tyrosine to alanine substitutions at Tyr-485 and Tyr-474. Tissue inhibitors of matrix metalloproteinases (TIMPs) -2 and -3 blocked transmigration, whereas TIMP-1 was ineffective. This profile suggested a role for membrane-type matrix metalloproteinases (MT-MMPs) in transmigration. Inhibitory antibodies and small interference RNA directed against MT1-MMP blocked transmigration, whereas overexpression of MT1-MMP in endothelial cells or monocytes promoted transmigration. MT1-MMP mediated the ectodomain cleavage of ICAM-1 that was blocked by TIMP-2 and -3. Overexpression of MT1-MMP rescued function in ICAM-1Y485A, and to a lesser extent in the cytoplasmic tail-deleted ICAM-1. In a binding assay, wild-type ICAM-1 bound to purified MT1-MMP while ICAM-1 mutants bound poorly. MT1-MMP co-localized with ICAM-1 at distinct structures in endothelial cells. MT1-MMP localization with cells expressing ICAM-1 mutations was reduced and diffused. These results indicate that the cytoplasmic tail of ICAM-1 regulates leukocyte transmigration through MT1-MMP interaction.