Cancer cells are able to proliferate at accelerated rates within the confines of a three-dimensional (3D) extracellular matrix (ECM) that is rich in type I collagen. The mechanisms used by tumor cells to circumvent endogenous antigrowth signals have yet to be clearly defined. We find that the matrix metalloproteinase, MT1-MMP, confers tumor cells with a distinct 3D growth advantage in vitro and in vivo. The replicative advantage conferred by MT1-MMP requires pericellular proteolysis of the ECM, as proliferation is fully suppressed when tumor cells are suspended in 3D gels of protease-resistant collagen. In the absence of proteolysis, tumor cells embedded in physiologically relevant ECM matrices are trapped in a compact, spherical configuration and unable to undergo changes in cell shape or cytoskeletal reorganization required for 3D growth. These observations identify MT1-MMP as a tumor-derived growth factor that regulates proliferation by controlling cell geometry within the confines of the 3D ECM.