Remodeling of the extracellular matrix (ECM) is an essential component of normal development and is also involved in the pathogenesis of arthritis and the spread of cancer. The matrix metalloproteinases and their natural inhibitors, the tissue inhibitors of metalloproteinases (TIMPs), play an important role in this context. We have isolated mouse cDNA clones encoding a novel member of the TIMP family, designated TIMP-3. We have assigned the Timp-3 locus to the [C1-D1] region of mouse chromosome 10 using both genetic and cytogenetic methods. The conceptual translation product of the Timp-3 cDNA shows a high degree of similarity with ChIMP-3, a recently cloned chicken metalloproteinase inhibitor, as well as significant structural similarity with the amino acid sequences of the previously isolated members of this family, TIMP-1 and TIMP-2. The pattern of expression of Timp-3 in the developing mouse embryo is distinct from that previously reported for Timp-1. Timp-3 is expressed in cartilage and skeletal muscle, in myocardium, in the skin, oral and nasal epithelium, in the newborn mouse liver, in the epithelium of some tubular structures such as the developing bronchial tree, oesophagus, colon, urogenital sinus, bile duct, in the kidney, salivary glands, and in the choroid plexus of the brain. The patterns of Timp-3 expression in surface epithelia and in the epithelial lining of many tubular organs suggests that TIMP-3 may be involved in regulating ECM remodeling during the folding of epithelia and during the formation, branching, and expansion of epithelial tubes. In the mouse placenta, expression is seen in the trophoblast, raising the possibility that TIMP-3 may be involved in regulating trophoblastic invasion of the uterus. We propose a role for TIMP-3 in musculoskeletal and cardiac development, in the morphogenesis of certain epithelial structures, and placental implantation.