The extracellular domain of -amyloid precursor protein (APP) contains an inhibitor against matrix metalloproteinase-2 (MMP-2, gelatinase A). Our previous study (Higashi, S. and Miyazaki, K. (2003) J Biol Chem 278, 14020-14028, 2003) demonstrated that the inhibitor is localized within the ISYGNDALMP sequence of APP and a synthetic decapeptide containing this sequence (named APP-derived inhibitory peptide, APP-IP) selectively inhibits the activity of MMP-2. To determine the region of interaction that correlates with the selective inhibition, we constructed various MMP-2 mutants. An MMP-2 mutant, that had all the hemopexin-like domain and three fibronectin-like type II domains of MMP-2 deleted, and native MMP-2 showed similar affinities for APP-IP, suggesting that only the catalytic domain of MMP-2 is essential for the interaction. Studies of chimeric proteases consisting of various parts of MMP-2 catalytic domain and those of MMP-7 (matrilysin) or MMP-9 (gelatinase B) further revealed that Ala88 and Gly94 in the non-prime side, and Tyr145 and Thr146 in the prime side of the substrate-binding cleft of MMP-2 contribute separately to the selective inhibition. Replacement of the amino acid residue at position 94 of a chimeric MMP mutant affected its interaction with the C-terminal Pro10 of APP-IP, whereas that of residues 145-148 affected the interaction with Tyr3 of the inhibitor, suggesting that the N to C direction of APP-IP relative to the substrate-binding cleft of MMP is analogous to that of propeptide in proMMP, and opposite to that of substrate. When the APP-IP sequence was added to the N-terminus of the catalytic domain of MMP-2, the activity of the protease was intramolecularly inhibited. We speculate that the direction of interaction makes the active site-bound APP-IP resistant to cleavage, thereby supporting the inhibitory action of the peptide inhibitor.