ADAMTS-4, aggrecanase-1, is a glutamyl endopeptidase capable of generating catabolic fragments of aggrecan analogous to those released from articular cartilage during degenerative joint diseases such as osteoarthritis. Efficient aggrecanase activity requires the presence of sulfated glycosaminoglycans (GAGs) attached to the aggrecan core protein, implying the contribution of substrate recognition /binding site(s) to ADAMTS-4 activity. In the present study, we demonstrate that inhibition of full-length ADAMTS-4 by full length TIMP-3 (a physiological inhibitor of metalloproteinases) is enhanced in the presence of aggrecan. Furthermore, we show that this modulatory effect on ADAMTS-4 inhibition is both specific to TIMP inhibitors and selective between TIMPs. Our data indicate that this interaction is mediated through the binding of glycosaminoglycans (specifically chondroitin-6-sulfate) of aggrecan to binding sites within the thrombospondin type-1 motif and spacer domains of ADAMTS-4 to form a complex with an improved binding affinity for TIMP-3 over free ADAMTS-4. The results of this study therefore indicate that the cartilage environment can modulate the function of enzyme-inhibitor systems and could have relevance for therapeutic approaches to aggrecanase modulation.