Here we report the inhibition of cellular invasion by a recombinant mouse endostatin and the possible mechanism of the inhibition. Endostatin significantly reduced endothelial as well as tumor cellular invasion into the reconstituted basement membrane in vitro. Gelatin zymographic analysis revealed that the activation of promatrix metalloproteinase-2 (proMMP-2) that was secreted from endothelial cells was blocked upon endostatin treatment. Studies with recombinant MMPs confirmed that endostatin inhibited proMMP-2 activation, mediated by both membrane-type 1 MMP and 4-aminophenylmercuric acetate. Furthermore, enzymatic assays using a peptide substrate demonstrated that endostatin inhibited the catalytic activities of both MMP-2 and membrane-type 1 MMP. Finally, coimmunoprecipitation experiments revealed that endostatin formed a stable complex with proMMP-2. These novel findings would, at least in part, explain the mechanism of the potent antiangiogenic and antitumor activities of endostatin.