In primary human melanoma, the membrane-type matrix metalloproteinase, MT3-MMP, is overexpressed in the most aggressive nodular-type tumors. Unlike MT1-MMP and MT2-MMP, which promote cell invasion through basement membranes and collagen type I-rich tissues, the function of MT3-MMP in tumor progression remains unclear. Here, we demonstrate that MT3-MMP inhibits MT1-MMP-driven melanoma cell invasion in three-dimensional collagen, while yielding an altered, yet MT1-MMP-dependent, form of expansive growth behavior that phenocopies the formation of nodular cell colonies. In melanoma cell lines originating from advanced primary or metastatic lesions, endogenous MT3-MMP expression was associated with limited collagen-invasive potential. In the cell lines with highest MT3-MMP expression relative to MT1-MMP, collagen-invasive activity was increased following stable MT3-MMP gene silencing. Consistently, MT3-MMP overexpression in cells derived from less advanced superficially spreading melanoma lesions, or in the MT3-MMP knockdown cells, reduced MT1-MMP-dependent collagen invasion. Rather than altering MT1-MMP transcription, MT3-MMP interacted with MT1-MMP in membrane complexes and reduced its cell surface expression. By contrast, as a potent fibrinolytic enzyme, MT3-MMP induced efficient invasion of the cells in fibrin, a provisional matrix component frequently found at tumor-host tissue interfaces and perivascular spaces of melanoma. Since MT3-MMP was significantly upregulated in biopsies of human melanoma metastases, these results identify MT3-MMP as a matrix-dependent modifier of the invasive tumor cell functions during melanoma progression.