Matrix metalloproteinases (MMPs) play a well-defined role in later stages of tumor progression. However, there has been evidence that they also contribute to earlier stages of malignant transformation. The Wnt signaling transduction pathway plays a critical role in development and in the pathogenesis of many epithelial cancers. Here we have used Wnt1-induced epithelial-mesenchymal transition (EMT) in C57MG murine mammary epithelial cells to study the role of MMPs in this early step of malignant progression. Overexpression of Wnt1 in C57MG cells promoted EMT, the translocation of β-catenin from the cell membrane to the nucleus and its transcriptional activity, cell proliferation and cell motility. Simultaneously, we observed an increased expression of stromelysin-1 (MMP-3) and a 5.5-fold increase in MMP-3 promoter activity in C57MG cells expressing Wnt1 compared with C57MG cells. Treatment of Wnt-overexpressing cells with MMP inhibitor AG3340 decreased MMP-3 expression. We also found evidence that MMP-3 and Wnt3a cooperate in enhancing the transcriptional activity of β-catenin in C57MG cells. Consistently, the effects of Wnt1 on EMT, proliferation and migration were inhibited by MMP inhibitors, or upon downregulation of MMP-3 by siRNA. These results suggest that MMP-3 is both a direct transcriptional target and a necessary contributor of the Wnt/β-catenin signaling pathway.