Membrane-type-1 matrix metalloproteinase (MT1-MMP) has transmembrane and cytoplasmic domains, which target it to invasive fronts. We analyzed the role of the cytoplasmic tail by expressing wild type MT1-MMP and three mutants with progressively truncated C termini in human Bowes melanoma cells. We examined gelatinase A activation and the localization and processing of recombinant proteins in stable cell clones using gelatin zymography, immunoblotting, and immunofluorescence. Cell invasion was analyzed in vitro by Matrigel invasion assays. Gelatinase A was activated in all cell clones. However, the localization of MT1-MMP to the leading edge of migrating cells and cell invasion through Matrigel were strongly enhanced only in cells expressing either wild type or truncated MT1-MMP lacking 6 C-terminal amino acid residues (Delta577). Truncations of 10 or 16 amino acid residues in the cytoplasmic domain (Delta567 and Delta573, respectively) disturbed MT1-MMP localization. The expression of wild type and Delta577 MT1-MMPs induced also their cleavage to 43-kDa cell surface forms and the release of soluble, approximately 20-kDa N-terminal fragments containing the catalytic center. A synthetic MMP inhibitor but not a gelatinase inhibitor prevented the processing, suggesting that autocatalytic cleavage occurs. Purified soluble MT1-MMP was also autoproteolytically processed to 43- and 20-kDa forms in vitro. Our results indicate that the cytoplasmic domain has an important role in cell invasion by controlling both the targeting and degradation/turnover of MT1-MMP.