We have cloned and characterized a cDNA encoding Dm1-MMP, the first matrix metalloproteinase (MMP) identified in Drosophila melanogaster. The isolated cDNA encodes a protein of 541 residues that has a domain organization identical to that of most vertebrate MMPs including a signal sequence, a prodomain with the activation locus, a catalytic domain with a zinc-binding site, and a COOH-terminal hemopexin domain. Northern blot analysis of Dm1-MMP expression in embryonic and larval adult tissues revealed a strong expression level in the developing embryo at 10-22 h, declining thereafter and being undetectable in adults. Western blot analysis confirmed the presence of pro- and active forms of Dm1-MMP in vivo during larval development. In situ hybridization experiments demonstrated that Dm1-MMP is expressed in a segmented pattern in cell clusters at the midline during embryonic stage 12-13, when neurons of the central nervous system start to arise. Recombinant Dm1-MMP produced in Escherichia coli exhibits a potent proteolytic activity against synthetic peptides used for analysis of vertebrate MMPs. This activity is inhibited by tissue inhibitors of metalloproteinases and by synthetic MMP inhibitors such as BB-94. Furthermore, Dm1-MMP is able to degrade the extracellular matrix and basement membrane proteins fibronectin and type IV collagen. On the basis of these data, together with the predominant expression of Dm1-MMP in embryonic neural cells, we propose that this enzyme may be involved in the extracellular matrix remodeling taking place during the development of the central nervous system in Drosophila.