Matrix metalloproteinase-7 (MMP-7) is primarily expressed in glandular epithelium. Therefore, its mechanism of action may be influenced by its regulated vectorial release to either the apical and/or basolateral compartments, where it would act on its various substrates. To gain a better understanding of where MMP-7 is released in polarized epithelium, we have analyzed its pattern of secretion in polarized MDCK cells expressing stably transfected human MMP-7 (MDCK-MMP-7), and HCA-7 and Caco2 human colon cancer cell lines. In all cell lines, latent MMP-7 was secreted to both cellular compartments, but was 1.5- to 3-fold more abundant in the basolateral compartment as compared to the apical. However, studies in the MDCK system demonstrated that MMP-7 activity was 2-fold greater in the apical compartment of MDCK-MMP-7(HIGH)-polarized monolayers, which suggests the apical co-release of an MMP-7 activator. In functional assays, MMP-7 over-expression increased cell saturation density as a result of increased cell proliferation with no effect on apoptosis. Apical MMP-7 activity was shown to be responsible for the proliferative effect, which occurred, as demonstrated by media transfer experiments, through cleavage of an apical substrate and not through the generation of a soluble factor. Taken together, our findings demonstrate the importance of MMP-7 secretion in relation to its mechanism of action when expressed in a polarized epithelium.