Human collagenase inhibitor is a ubiquitous glycoprotein capable of blocking the action of several connective tissue metalloproteinases, including collagenase, gelatinase, and proteoglycanase. The action of this proteinase inhibitor may constitute a pivotal step in the control of connective tissue matrix degradation. Using monospecific antibody to collagenase inhibitor as an immunocytochemical probe, we determined its in vivo localization in normal human skin and in a pathologic state, the altered connective tissue stroma surrounding basal cell carcinoma. Collagenase inhibitor was localized diffusely throughout the dermis and appeared to be associated with the extracellular matrix components, both in normal skin and in basal cell carcinoma. Intense staining was present in the stroma surrounding islands of basal cell carcinoma. The increased amounts of collagenase inhibitor may be a result of its production by stromal fibroblasts stimulated by cytokines of tumor or inflammatory cell origin. These findings are similar to those previously described for dermal collagenase. Both collagenase inhibitor and collagenase itself appear to be normal components of the extracellular matrix, and amounts of both are increased in the altered stroma surrounding neoplastic cells. Thus we suggest that the balance of degradative proteinase(s) to specific inhibitor may be an important factor in determining the composition of the extracellular matrix.