Rheumatoid synovial cells dissociated from matrix and adherent to culture dishes released a latent form of collagenase into culture medium. Previous studies have shown that the latent enzyme does not complex with alpha2-macroglobulin and binds to fibrillar substrate. We now show that serum-free culture medium of the synovial cells contains an inhibitor of collagenase as well as latent enzyme; the two were separated on a column of acrylamide/agarose. Latent collagenase (estimated mol wt 45,000-49,000) was transformed by trypsin to active collagenase of approximately equal to mol wt 33,000. When mixed with inhibitor the active enzyme formed an inactive complex again with approximately equal to mol wt 45,000-49,000. The inhibitor(s) itself was found in one major peak of mol wt 33,000-35,000 and several minor peaks eluting with lower apparent molecular weight. Mersalyl, an organic mercurial compound, effectively activated latent collagenase producing an active enzyme with approximately equal to mol wt 33,000. Bacterial collagenase did not activate latent enzyme. We suggest that latent rheumatoid synovial collagenase, as it is harvested from synovial cells in culture, is an enzyme-inhibitor complex.