Degradation of proteoglycans is an initial change in osteoarthritic cartilage. Matrix metalloproteinase-3 (MMP-3; stromelysin) capable of degrading cartilage proteoglycans and type IX collagen was immunolocalized in osteoarthritic and normal cartilage. Immunohistochemical studies showed MMP-3 in chondrocytes of the superficial and transition zones in approximately 90% of osteoarthritic cartilage (60 of 67 samples) and in 31% of those of the superficial zone in some normal cartilage (4 of 13 samples). MMP-3 staining correlated directly with the histological histochemical scores of Mankin and with proteoglycan depletion, up to a certain grade of severity. Chondrocytes in the deep radial zone, clusters, and osteophytes were immunostained only when proteoglycan depletion and fissures affected them. Culture media from osteoarthritic cartilage contained significantly higher levels of metalloproteinase activity that was identified as MMP-3 by immunoblotting and lower amounts of tissue inhibitor of metalloproteinases compared with those in the control samples. MMP-3 was also immunolocalized in the lining cells of most osteoarthritic synovium (20 of 23 specimens, 87%) with a direct correlation with scores of inflammatory cell infiltration in the synovium, but it was not detected in the normal synovium. Light and electron microscopic studies demonstrated that MMP-3 digests proteoglycan aggregates in human articular cartilage. Treatment of normal and osteoarthritic cartilage slices with tumor necrosis factor-alpha and/or interleukin-1 alpha increased the number of MMP-3-immunoreactive chondrocytes and the intensity of the staining. These data suggest that MMP-3 produced by the chondrocytes and synovial lining cells under stimulation with these cytokines may be important in proteoglycan degradation in human ostoearthritic cartilage.