The role of matrix metalloproteinases (MMPs) in collagen fibrillogenesis during development has been studied in the well-characterized chicken metatarsal tendon. Collagen fibrils are initially assembled as intermediates, and the mature fibrils assemble by linear and lateral growth from these intermediates. We hypothesize that this involves the turnover of fibril-associated molecules mediated by the expression and activation of matrix metalloproteinase-2 (MMP-2). We demonstrate changes in the ratio of full-length to truncated MMP-2 during tendon development, consistent with enzyme activation. The level of full-length proMMP-2 remains relatively unchanged, although the truncated form of MMP-2 is highest prior to and during fibril growth. Membrane-type matrix metalloproteinase-3 (MT3-MMP, MMP-16) is fibroblast-associated and involved in the regulation of MMP-2 and in direct matrix turnover. The ratio of full-length proMT3-MMP/truncated (active) MT3-MMP has a pattern similar to that of full-length proMMP-2/truncated (active) MMP-2 during tendon development. Regulation of proMMP-2 activation involves complex formation with active MT3-MMP and TIMP-2. The constantly low TIMP-2 expression seen in tendon development is consistent with this role. Isolation of collagen fibrils from pre-fibril growth tendons (14 day) in the presence of activated MMP-2 is associated with premature fibril growth observed as increased fibril diameters compared with controls. These data implicate MMP-2/MT3-MMP in the initiation and progression of fibril growth, matrix assembly, and tendon development. This may involve the turnover of fibril-associated molecules involved in regulating linear and lateral growth, such as small leucine-rich proteoglycans and fibril-associated collagens. Activation of proMMP-2 dependent on MT3-MMP would allow the focal control of turnover.