Evidence suggests that hepatocyte growth factor (HGF) ameliorates renal fibrosis in animal models of chronic renal disease by promoting extracellular matrix catabolism. This study examined the molecular mechanisms of HGF-induced alterations in matrix degradation both in vitro and in vivo. In vitro, HGF increased the collagen catabolizing activity of human proximal tubular epithelial cells (HKC) that were treated with TGF-beta1. Increased collagen catabolism was associated with enhanced activity of both matrix metalloproteinases (MMP) and plasminogen activators (PA)/plasmin proteolytic pathways. HGF abrogated TGF-beta1-induced production of the profibrotic tissue inhibitor of metalloproteinase-2 (TIMP-2) and plasminogen activator inhibitor-1 (PAI-1). In addition, HGF induced the production of MMP-9. In vivo, continuous infusion of HGF in the rat remnant kidney model ameliorated renal fibrosis and tubulointerstitial collagen deposition. This was associated with increased tubular expression of MMP-9, enhanced in situ gelatinolytic activity, partially restored plasmin activity and decreased expression of TIMP-2 and PAI-1 in tubular cells, and upregulation of renal TIMP-3 expression. Conversely, blocking of endogenous HGF by an anti-HGF neutralizing antibody increased renal fibrosis and interstitial collagen. This was accompanied by decreased tubular expression of MMP-9, less in situ proteolytic activity, and elevated expression of TIMP-2 and PAI-1 in tubular cells. Collectively, these findings demonstrate that HGF ameliorates renal fibrosis by enhancing extracellular matrix catabolism via both MMP and the PA/plasmin proteolytic pathways.