Membrane type 1 matrix metalloproteinase (MT1-MMP, MMP14) is an efficient extracellular matrix (ECM) degrading enzyme that plays important roles in tissue homeostasis and cell invasion. Like a number of type I membrane proteins, MT1-MMP can be internalized from the cell surface through early and recycling endosomes to late endosomes, and recycled to the plasma membrane. Late endosomes participate in the biogenesis of small (30-100 nm) vesicles, exosomes, which redirect plasma membrane proteins for extracellular secretion. We hypothesized that some of the endosomal MT1-MMP could be directed to exosomes for extracellular release. Using cultured human fibrosarcoma (HT-1080) and melanoma (G361) cells we provide evidence that both the full-length 60 kDa and the proteolytically processed 43 kDa forms of MT1-MMP are secreted in exosomes. The isolated exosomes were identified by their vesicular structure in electron microscopy and by exosomal marker proteins CD9 and tumor susceptibility gene (TSG101). Furthermore, exosomes contained beta1-integrin (CD29). The exosomes were able to activate pro-MMP-2 and degrade type 1 collagen and gelatin, suggesting that the exosomal MT1-MMP was functionally active. The targeting of MT1-MMP in exosomes represents a novel mechanism for cancer cells to secrete membrane type metalloproteolytic activity into the extracellular space.