The membrane-associated matrix metalloproteinase-14, MT1-MMP, has been implicated in pericellular proteolysis with an important role in cellular invasion of collagenous tissues. It is substantially upregulated in various cancers and rheumatoid arthritis, and has been considered as a potential therapeutic target. Here, we report the identification of antibody fragments to MT1-MMP that potently and specifically inhibit its cell surface functions. Lead antibody clones displayed inhibitory activity towards pro-MMP-2 activation, collagen-film degradation and gelatin-film degradation, and were shown to bind to the MT1-MMP catalytic domain outside the active site cleft, inhibiting binding to triple helical collagen. Affinity maturation using CDR3 randomization created a second generation of antibody fragments with dissociation constants down to 0.11 nM, corresponding to an improved affinity of 332-fold with the ability to interfere with cell-surface MT1-MMP functions, displaying IC50 values down to 5 nM. Importantly, the new inhibitors were able to inhibit collagen invasion by tumor-cells in vitro and in vivo primary tumor growth and metastasis of MDA-MB-231 cells in a mouse orthotopic xenograft model. Herein is the first demonstration that an inhibitory antibody targeting sites outside the catalytic cleft of MT1-MMP can effectively abrogate its in vivo activity during tumorigenesis and metastasis.