Pancreatic ductal adenocarcinoma (PDAC) is associated with a pronounced collagen-rich fibrosis known as desmoplastic reaction; however, the role of fibrosis in PDAC is poorly understood. In this report we show that collagen can regulate the tumor suppressive let-7 family of microRNAs in pancreatic cancer cells. PDAC cells growing in 3D collagen gels repress mature let-7 without affecting the precursor form of let-7 in part through increased expression of membrane type 1-matrix metalloproteinase (MT1-MMP, MMP-14) and ERK1/2 activation. PDAC cells in collagen also demonstrate increased TGF-β1 signaling, and blocking TGF-β1 signaling attenuated collagen-induced MT1-MMP expression, ERK1/2 activation and repression of let-7 levels. Although MT1-MMP overexpression was not sufficient to inhibit let-7 on 2D tissue culture plastic, overexpression of MT1-MMP in PDAC cells embedded in 3D collagen gels or grown in vivo repressed let-7 levels. Importantly, MT1-MMP expression significantly correlated with decreased levels of let-7 in human PDAC tumor specimens. Overall, our study emphasizes the interplay between the key proteinase MT1-MMP and its substrate type I collagen in modulating microRNA expression, and identifies an additional mechanism by which fibrosis may contribute to PDAC progression.