ADAMTS1 is an extracellular metalloproteinase known to participate in a variety of biological processes that includes inflammation, angiogenesis, and development of the urogenital system. Many of its functions rely on its catalytic activity, which thus far has been limited to the cleavage of the matrix proteoglycans aggrecan and versican. However, it is likely that other substrates exist. Using a yeast two-hybrid screen, we identified the Kunitz-type inhibitor, tissue factor pathway inhibitor-2 (TFPI-2), as a binding partner of ADAMTS1. The interaction was confirmed by several biochemical and cell-based assays. In addition, our studies revealed alterations in the pattern of TFPI-2-secreted isoforms and in its extracellular location caused by the specific action of ADAMTS1. Interestingly, we found that TFPI-2 is a novel substrate of ADAMTS1. The cleavage removes a protease-sensitive C-terminal region in TFPI-2, altering its binding properties. The proposed role of TFPI-2 as a maintenance factor of extracellular remodeling suggests the indirect function of ADAMTS1 as an additional homeostatic player by its ability to alter the extracellular location of TFPI-2 and, therefore, to disrupt the remodeling machinery, a phenomenon directly associated to pathologies such as atherosclerosis and tumor progression.