Homodimerization of the membrane-bound collagenase MT1-MMP [membrane-type 1 MMP (matrix metalloproteinase)] is crucial for its collagenolytic activity. However, it is not clear whether this dimerization is regulated during cellular invasion into three-dimensional collagen matrices. To address this question, we established a fluorescence resonance energy transfer system to detect MT1-MMP dimerization and analysed the process in cells invading through three-dimensional collagen. Our data indicate that dimerization occurs dynamically and constantly at the leading edge of migrating cells, but not the trailing edge. We found that polarized dimerization was not due to ECM (extracellular matrix) attachment, but was rather controlled by reorganization of the actin cytoskeleton by the small GTPases, Cdc42 (cell division cycle 42) and Rac1. Our data indicate that cell-surface collagenolytic activity is regulated co-ordinately with cell migration events to enable penetration of the matrix physical barrier.