We report that the isolated C-terminal domain of progelatinase A is inhibitory to the activation of this proenzyme by primary skin fibroblast plasma membranes but is unable to inhibit organomercurial-induced self-cleavage and activation. Ligand binding studies demonstrate that fibroblasts stimulated with concanavalin A to activate progelatinase A have a significantly enhanced level of cell surface-associated progelatinase A. Tissue inhibitor of metalloproteinases-2 (TIMP-2), an effective inhibitor of membrane-mediated progelatinase A activation, is able to abolish the enhanced level of cell surface-associated progelatinase A that occurs following stimulation. TIMP-1, a poor inhibitor of membrane activation, is unable to inhibit the cell surface binding of progelatinase A. The enhancement in the binding of 125I-progelatinase A to fibroblasts following concanavalin A stimulation can be blocked by the inclusion of excess C-terminal gelatinase A but not by a truncated form of gelatinase A lacking the C-terminal domain. Scatchard analysis of the binding of 125I-progelatinase A to concanavalin A-stimulated fibroblasts has identified 950,000 gelatinase binding sites per cell with a Kd of 1.3 x 10(-8) M. Analysis of non-stimulated fibroblasts has identified 500,000 sites per cell with a Kd of 2.6 x 10(-8) M. We propose that membrane-mediated activation of progelatinase A involves binding of the proenzyme through its C-terminal domain to the cell surface and that TIMP-2 can inhibit activation by interaction with progelatinase A through the C-terminal domain, thus preventing binding of the proenzyme.