ADAMTS-4 (aggrecanase-1) is implicated in the breakdown of articular cartilage and is an attractive target for therapeutic intervention in arthritis. Cleavage of the native substrate, aggrecan, occurs through exosite interactions and peptide sequence recognition. Although expected to be competitive with aggrecan, the hydroxamic acid, SC81956, demonstrated noncompetitive inhibition kinetics with a Ki of 23 nM. The IC50 of SC81956 did not change when aggrecan was varied from 12.8 to 200 nM (0.2-3.3 times the apparent aggrecan Km of 61 nM) but was shifted as expected for a competitive inhibitor when increasing levels of a low molecular weight peptide substrate were added to a fluorogenic peptide assay system. These observations are consistent with a model for aggrecan cleavage where substrate initially binds at an exosite, followed by binding of the appropriate peptide sequence at the active site. A peptide-competitive inhibitor could bind both free enzyme and initial substrate-enzyme exosite complex but would be excluded by the final Michaelis complex. Noncompetitive appearing kinetics for such inhibitors is predicted as long as the equilibrium between the two forms of enzyme-substrate complex significantly favors the initial exosite complex. In support, hydrolysis of a low molecular weight peptide substrate and its inhibition by SC81956 were unaffected by aggrecan concentrations substantially above the Km. These observations suggest that the apparent Km for aggrecan cleavage predominately reflects the exosite interaction. Consequently, the efficacy of active-site inhibitors of ADAMTS-4 will not be limited by competition with native substrate as predicted from the Km determined by traditional kinetic models.