The suggested model for pro-matrix metalloproteinase-2 (proMMP-2) activation by membrane type 1 MMP (MT1-MMP) implicates the complex between MT1-MMP and tissue inhibitor of MMP-2 (TIMP-2) as a receptor for proMMP-2. To dissect this model and assess the pathologic significance of MMP-2 activation, an artificial receptor for proMMP-2 was created by replacing the signal sequence of TIMP-2 with cytoplasmic/transmembrane domain of type II transmembrane mosaic serine protease (MSP-T2). Unlike TIMP-2, MSP-T2 served as a receptor for proMMP-2 without inhibiting MT1-MMP, and generated TIMP-2-free active MMP-2 even at a low level of MT1-MMP. Thus, MSP-T2 did not affect direct cleavage of the substrate testican-1 by MT1-MMP, whereas TIMP-2 inhibited it even at the level that stimulates proMMP-2 processing. Expression of MSP-T2 in HT1080 cells enhanced MMP-2 activation by endogenous MT1-MMP and caused intensive hydrolysis of collagen gel. Expression of MSP-T2 in U87 glioma cells, which express a trace level of endogenous MT1-MMP, induced MMP-2 activation and enhanced cell-associated protease activity, activation of extracellular signal-regulated kinase, and metastatic ability into chick embryonic liver and lung. MT1-MMP can exert both maximum MMP-2 activation and direct cleavage of substrates with MSP-T2, which cannot be achieved with TIMP-2. These results suggest that MMP-2 activation by MT1-MMP potentially amplifies protease activity, and combination with direct cleavage of substrate causes effective tissue degradation and enhances tumor invasion and metastasis, which highlights the complex role of TIMP-2. MSP-T2 is a unique tool to analyze physiologic and pathologic roles of MMP-2 and MT1-MMP in comparison with TIMP-2.