Resolution of inflammation reduces pathological tissue destruction and restores tissue homeostasis. Here, we used a proteomic protease substrate discovery approach, terminal amine isotopic labeling of substrates (TAILS), to analyze the role of the macrophage-specific matrix metalloproteinase-12 (MMP12) in inflammation. In murine peritonitis, MMP12 inactivates antithrombin and activates prothrombin, prolonging the activated partial thromboplastin time. Furthermore, MMP12 inactivates complement C3 to reduce complement activation and inactivates the chemoattractant anaphylatoxins C3a and C5a, whereas iC3b and C3b opsonin cleavage increases phagocytosis. Loss of these anti-inflammatory activities in collagen-induced arthritis in Mmp12^−/− mice leads to unresolved synovitis and extensive articular inflammation. Deep articular cartilage loss is associated with massive neutrophil infiltration and abnormal DNA neutrophil extracellular traps (NETs). The NETs are rich in fibrin and extracellular actin, which TAILS identified as MMP12 substrates. Thus, macrophage MMP12 in arthritis has multiple protective roles in countering neutrophil infiltration, clearing NETs, and dampening inflammatory pathways to prepare for the resolution of inflammation.