In addition to releasing collagenase and proteoglycanase activity, rabbit articular chondrocytes in monolayer culture released into the culture medium, latent, neutral enzyme activity which when activated by p-aminophenylmercuric acetate degraded fluorescein-labeled polymeric rat tail tendon Type I collagen and the tropocollagen TCA and TCB fragments of human Type II collagen into smaller peptides at 37 degrees C. Enzyme activity was abolished if p-aminophenylmercuric acetate-activated culture medium was preincubated with 1.10-phenanthroline, a metal chelator. Thus, articular chondrocytes in monolayer culture are capable of producing neutral proteinases which acting together can result in complete degradation of tendon and cartilage collagen to small peptides.