Changes in EphA2 signaling can affect cancer cell-cell communication and motility through effects on actomyosin contractility. However, the underlying cell-surface interactions and molecular mechanisms of how EphA2 mediates these effects have remained unclear. We demonstrate here that EphA2 and membrane-anchored membrane type-1 matrix metalloproteinase (MT1-MMP) were selectively up-regulated and coexpressed in invasive breast carcinoma cells, where, upon physical interaction in same cell-surface complexes, MT1-MMP cleaved EphA2 at its Fibronectin type-III domain 1. This cleavage, coupled with EphA2-dependent Src activation, triggered intracellular EphA2 translocation, as well as an increase in RhoA activity and cell junction disassembly, which suggests an overall repulsive effect between cells. Consistent with this, cleavage-prone EphA2-D359I mutant shifted breast carcinoma cell invasion from collective to rounded single-cell invasion within collagen and in vivo. Up-regulated MT1-MMP also codistributed with intracellular EphA2 in invasive cells within human breast carcinomas. These results reveal a new proteolytic regulatory mechanism of cell-cell signaling in cancer invasion.