Matrix metalloproteinases (MMPs) including membrane type 1 MMP (MT1-MMP) can degrade extracellular matrix and cell surface receptor molecules and have an essential function in malignancy. Recently, we established a functional link between MT1-MMP and the receptor of complement component 1q (gC1qR). The gC1qR is known as a compartment-specific regulator of diverse cellular and viral proteins. Once released by proliferating cells, soluble gC1qR may inhibit complement component 1q hemolytic activity and play important roles in vivo in assisting tumor cells to evade destruction by complement. Here, we report that gC1qR is susceptible to MT1-MMP proteolysis in vitro and in cell cultures. The major MT1-MMP cleavage site (Gly(79) down arrow Gln(80)) is localized within the structurally disordered loop connecting the beta(3) and the beta(4) strands of gC1qR. The recombinant MT1-MMP construct that included the catalytic domain but lacked the hemopexin-like domain lost the proteolytic capacity; however, it retained the ability to bind gC1qR. Inhibition of MT1-MMP activity by a hydroxamate inhibitor converted the protease into a cell surface receptor of gC1qR and promoted co-precipitation MT1-MMP with the soluble gC1qR protein. It is tempting to hypothesize that these novel mechanisms may play important roles in vivo and have to be taken into account in designing hydroxamate-based cancer therapy.