Membrane type 4 matrix metalloproteinase (MT4-MMP) shows the least sequence homology to the other MT-MMPs, suggesting a distinct function for this protein. We have isolated a complete cDNA corresponding to the mouse homologue which includes the signal peptide and a complete pro-domain, features that were lacking from the human form originally isolated. Mouse MT4-MMP (mMT4-MMP) expressed in COS-7 cells is located at the cell surface but does not show ability to activate pro-MMP2. The pro-catalytic domain was expressed in Escherichia coli as insoluble inclusions and active enzyme recovered after refolding. Activity of the isolated catalytic domain against synthetic peptides commonly used for MMP enzyme assays could be inhibited by TIMP1, -2, and -3. The recombinant mMT4-MMP catalytic domain was also unable to activate pro-MMP2 and was very poor at hydrolyzing components of the extracellular matrix with the exception of fibrinogen and fibrin. mMT4-MMP was able to hydrolyze efficiently a peptide consisting of the pro-tumor necrosis factor alpha (TNFalpha) cleavage site, a glutathione S-transferase-pro-TNFalpha fusion protein, and was found to shed pro-TNFalpha when co-transfected in COS-7 cells. MT4-MMP was detected by Western blot in monocyte/macrophage cell lines which in combination with its fibrinolytic and TNFalpha-converting activity suggests a role in inflammation.