Tat, the HIV transactivating protein, and matrix metalloproteinases (MMPs), a family of extracellular matrix (ECM) endopeptidases, have been implicated in the pathogenesis of HIV-associated dementia. However, the possibility that MMPs interact with viral proteins has remained unexplored. We therefore treated mixed human fetal neuronal cultures with recombinant Tat and select MMPs. Neurotoxicity was determined by measuring mitochondrial membrane potential and neuronal cell death. Previous studies have shown that Tat and MMP independently cause neurotoxicity. Surprisingly, we found the combination of Tat and MMP produced significant attenuation of neurotoxicity. To determine whether there was a physical interaction between Tat and MMP, we used protein electrophoresis and Western blot techniques, and found that MMP-1 can degrade Tat. This effect was blocked by MMP inhibitors. Furthermore, MMP-1 decreased Tat-mediated transactivation of the HIV long terminal repeat region, and this functionality was restored when MMP-1 activity was inhibited. These results suggest that the decrease in Tat-induced neurotoxicity and HIV transactivation is due to Tat's enzymatic cleavage by MMP-1. The direct interaction of human MMPs with viral proteins has now been demonstrated, with resultant modulation of Tat-mediated neurotoxicity and transactivation. This study elucidates a unique viral-host interaction that may serve as an innate host defense mechanism.