The role of intracellular proteases (e.g., calpains and caspases) in the pathophysiology of neuronal cell death has been extensively investigated. More recently, accumulating data have suggested that extracellular proteolysis also plays a critical role. The two major systems that modify the extracellular matrix in brain are the plasminogen activator (PA) and matrix metalloproteinase (MMP) axes. This Mini‐Review delineates major pathways of PA and MMP action after stroke, brain trauma, and chronic inflammation. Deleterious effects include the disruption of blood–brain barrier integrity, amplification of inflammatory infiltrates, demyelination, and possibly interruption of cell–cell and cell–matrix interactions that may trigger cell death. In contrast, PA‐MMP actions may contribute to extracellular proteolysis that mediates parenchymal and angiogenic recovery after brain injury. As the mechanisms of deleterious vs. potentially beneficial PA and MMP actions become better defined, it is hoped that new therapeutic targets will emerge for ameliorating the sequelae of brain injury and inflammation. © 2002 Wiley‐Liss, Inc.