Co-expression of several members of the matrix metalloproteinase (MMP) family is a characteristic of human carcinomas. To investigate the role of the recently cloned collagenase-3 (MMP-13) in epidermal tumors, we studied samples representing malignant (basal and squamous cell carcinoma, Paget's disease), pre-malignant (Bowen's disease, solar keratosis), and benign (keratoacanthoma, seborrheic keratosis, linear epidermal nevus) tumors. Basal cell carcinomas expressed collagenase-3 mRNA in focal areas of keratinized cells, the squamous differentiation of which was confirmed by positive immunostaining for involucrin. Apoptosis was observed in central parts of these foci. In squamous cell carcinomas, collagenase-3 expression was detected at the epithelial tumor front and less frequently in the surrounding stromal cells. Collagenase-3 mRNA co-localized with immunostaining for laminin-5, an adhesion molecule suggested to participate in the migration of tumor cells. The pre-malignant and benign tumors were mostly negative for collagenase-3. Stromelysin-1, a potential activator of latent collagenases, was frequently expressed by stromal cells surrounding the malignant tumors, and the two MMPs occasionally co-localized in keratotic foci. Our results demonstrate that in basal cell carcinomas, expression of collagenase-3 is associated with terminal differentiation of epithelial cells. Furthermore, the gene is activated during skin carcinogenesis, and we suggest a role for collagenase-3 in degradation of the extracellular matrix associated with malignant epithelial growth.