We demonstrated the cells producing collagenase and the time course of collagenase-production at early stages of wound healing, using histology and two immunohistochemical procedures on cross sections of rat skin harvested 0, 3, 5, 7 and 12 days after full-thickness incisions. A monospecific rabbit polyclonal antibody to neutral collagenase purified from rat myometrial cells was used to demonstrate collagenase production. Specificity of this reaction was confirmed by blocking the reaction with excess homogeneously purified antigen. Macrophages were simultaneously labelled using a mouse anti-rat monoclonal antibody recognizing exclusively mature macrophages. Intracellular collagenase was not reliably detectable at day 0, but was prominent at days 3 and 5 and thereafter declined. Double labeling technique showed occasional macrophages producing collagenase in the developing granulation tissue, but most cells labeled as macrophages were negative for collagenase. Most activity was found in fibroblasts adjacent to granulation tissue elements. Since the granulation tissue parallels revascularization in a dendritic pattern, a cross section at three days typically shows an annulus of collagenase-positive cells surrounding a branch of the active granulation tissue. At days 5, 7 and 12 after wounding the pattern of collagenase expression became indistinct as more tissue was involved in the granulation process. However, double-labelling for macrophages and collagenase showed the dichotomy between collagenase expression and presence of macrophages to persist. The finding that collagenase is produced in connective tissue adjacent to granulation tissue suggests an inductive process, possibly due to diffusion of cytokines produced by granulation tissue elements.