The mammalian tolloid family of metalloproteinases is essential for tissue patterning and extracellular matrix assembly. The four members of the family: bone morphogenetic protein-1 (BMP-1), mammalian tolloid (mTLD), tolloid-like (TLL)-1 and TLL-2 differ in their substrate specificity and activity levels, despite sharing similar domain organization. We have previously described a model of substrate exclusion by dimerisation to explain differences in the activities of monomeric BMP-1 and dimers of mTLD and TLL-1. Here we show that TLL-2, the least active member of the tolloid family, is predominantly monomeric in solution, therefore it appears unlikely that substrate exclusion via dimerisation is a mechanism for regulating TLL-2 activity. X-ray scattering and electron microscopy structural and biophysical analyses reveal an elongated shape for the monomer and flexibility in the absence of calcium. Furthermore, we show that TLL-2 can cleave chordin in vitro, similar to other mammalian tolloids, but truncated forms of TLL-2 mimicking BMP-1 are unable to cleave chordin. However, both the N- and C-terminal non-catalytic domains from all mammalian tolloids bind chordin with high affinity. The mechanisms underlying substrate specificity and activity in the tolloid family are complex with variation between family members and depend on both multimerisation and substrate interaction.