The family of matrix metalloproteinases is a family of closely related enzymes that play an important role in physiological and pathological processes of matrix degradation. The most distinctive characteristic of interstitial collagenases (fibroblast and neutrophil collagenases) is their ability to cleave interstitial collagens at a single peptide bond; however, the precise region of the enzyme responsible for this substrate specificity remains to be defined. To address this question, we generated truncated mutants of neutrophil collagenase with various deletions in the COOH-terminal domain and chimeric molecules between neutrophil collagenase and stromelysin and assayed the expressed enzymes against type I collagen and the general substrate, casein. Our data suggest that substrate specificity for interstitial collagen is determined by a 16-aa sequence in the COOH-terminal domain of neutrophil collagenase and is influenced by the integrity of a disulfide-defined loop at the COOH terminus for maximal activity. It was found that a relatively large region of 62-aa residues influenced the relative efficiency of collagenolytic activity. In addition to the region that conferred this specificity, a site at the COOH side of the presumptive zinc-binding locus was found to be necessary for general catalytic activity. Mutation of a critical aspartic residue at position 253 within this area resulted in complete loss of proteolytic activity, suggesting that Asp-253 might function as one of the ligands for divalent cations, which are essential for enzymatic activity.