Progressive renal interstitial fibrosis and tubular atrophy represent the final injury pathway for all commonly encountered forms of renal disease that lead to end-stage renal failure. It has been recently recognized that myofibroblastic cells are the major contributors to the deposition of interstitial collagens. While there are several potential cellular sources of myofibroblasts, attention has focused on the transformation of the organized tubular epithelium to the myofibroblastic phenotype, a process potently driven both in vitro and in vivo by transforming growth factor-β1 (TGF-β1). Integrity of the underlying basal lamina provides cellular signals that maintain the epithelial phenotype, and disruption by discrete proteases could potentially initiate the transformation process. We demonstrate that TGF-β1 coordinately stimulates the synthesis of a specific matrix metalloproteinase, gelatinase A (MMP-2), and its activator protease, MT1-MMP (MMP-14), and that active gelatinase A is absolutely required for epithelial-mesenchymal transformation induced by TGF-β1. In addition, purified active gelatinase A alone is sufficient to induce epithelial-mesenchymal transformation in the absence of exogenous TGF-β1. Gelatinase A may also mediate epithelial-mesenchymal transformation in a paracrine manner through the proteolytic generation of active TGF-β1 peptide. MT1-MMP and gelatinase A were co-localized to sites of active epithelial-mesenchymal transformation and basal lamina disruption in the rat remnant kidney model of progressive renal fibrosis. These studies indicate that a discrete matrix metalloproteinase, gelatinase A, is capable of inducing the complex genetic rearrangements that characterize renal tubular epithelial-mesenchymal transformation.