Fundamental cellular processes including angiogenesis and cell migration require a proteolytic cascade driven by interactions of membrane-type matrix metalloproteinase 1 (MT1-MMP) and progelatinase A (proMMP-2) that are dependent on the presence of tissue inhibitor of metalloproteinases 2 (TIMP-2). There are unique interactions between TIMP-2 and MT1-MMP, which we have previously defined, and here we identify TIMP-2 sequence motifs specific for proMMP-2 binding in the context of its activation by MT1-MMP. A TIMP-2 mutant encoding the C-terminal domain of TIMP-4 showed loss of proMMP-2 activation, indicating that the C-terminal domain of TIMP-2 is important in establishing the trimolecular complex between MT1-MMP, TIMP-2 and proMMP-2. This was confirmed by analysis of a TIMP-4 mutant encoding the C-terminal domain of TIMP-2, which formed a trimolecular complex and promoted proMMP-2 processing to the intermediate form. Mutants encoding TIMP-4 from Cys(1) to Leu(185) and partial tail sequence of TIMP-2 showed some gain of activating capability relative to TIMP-4. The identified residues were subsequently mutated in TIMP-2 (E(192)-D(193) to I(192)-Q(193)) and this inhibitor showed a significantly reduced ability to facilitate proMMP-2 processing by MT1-MMP. Furthermore, the tail-deletion mutant Delta(186-194)TIMP-2 was completely incapable of promoting proMMP-2 activation by MT1-MMP. Thus the C-terminal tail residues of TIMP-2 are important determinants for stable trimolecular complex formation between TIMP-2, proMMP-2 and MT1-MMP and play an important role in MT1-MMP-mediated processing to the intermediate and final active forms of MMP-2 at the cell surface.