To explore possible physiologic functions for the metalloproteinase collagenase-3, we have examined its temporal and spatial expression during human fetal development. Except for mesenchymal cells in the umbilical cord at 4 weeks of gestation, signal for collagenase-3 mRNA was confined to mineralizing skeletal tissue and detected in hypertrophic chondrocytes and osteoblastic cells involved in ossification beginning at 10 weeks and continuing through gestation. These cells were also immunoreactive with collagenase-3 antiserum, indicating their ability to produce collagenase-3 protein. In osteoblastic cells, the expression of membrane-type 1 metalloproteinase and 72-kd gelatinase mRNA, which have the capacity to activate collagenase-3 in vitro, colocalized with that of collagenase-3. In postnatal tissues, collagenase-3 was re-expressed in processes involving skeletal remodeling, such as bone cysts and ectopic bone and cartilage formation. Multinucleated osteoclasts were consistently negative for collagenase-3. Furthermore, in patients with seropositive rheumatoid arthritis, expression of collagenase-3 was prominent in articular cartilage, and collagenase-3 protein was detected by immunoblotting in synovial fluids. Consistent with its substrate specificities, a plausible function for collagenase-3 in these processes is to preferentially degrade type II collagen, thus serving a role during primary ossification, in skeletal remodeling, and in destructive joint disease.