ADAMTS4 (aggrecanase-1), a secreted enzyme belonging to the ADAMTS (a disintegrin and metalloproteinase with thrombospondin motifs) gene family, is considered to play a key role in the degradation of cartilage proteoglycan (aggrecan) in osteoarthritis and rheumatoid arthritis. To clone molecules that bind to ADAMTS4, we screened a human chondrocyte cDNA library by the yeast two-hybrid system using the ADAMTS4 spacer domain as bait and obtained cDNA clones derived from fibronectin. Interaction between ADAMTS4 and fibronectin was demonstrated by chemical cross-linking. A yeast two-hybrid assay and solid-phase binding assay using wild-type fibronectin and ADAMTS4 and their mutants demonstrated that the C-terminal domain of fibronectin is capable of binding to the C-terminal spacer domain of ADAMTS4. Wild-type ADAMTS4 was co-localized with fibronectin as determined by confocal microscopy on the cell surface of stable 293T transfectants expressing ADAMTS4, although ADAMTS4 deletion mutants, including Delta Sp (Delta Arg(693)-Lys(837), lacking the spacer domain), showed negligible localization. The aggrecanase activity of wild-type ADAMTS4 was dose-dependently inhibited by fibronectin (IC(50) = 110 nm), whereas no inhibition was observed with Delta Sp. The C-terminal 40-kDa fibronectin fragment also inhibited the activity of wild-type ADAMTS4 (IC(50) = 170 nm). These data demonstrate for the first time that the aggrecanase activity of ADAMTS4 is inhibited by fibronectin through interaction with their C-terminal domains and suggest that this extracellular regulation mechanism of ADAMTS4 activity may be important for the degradation of aggrecan in arthritic cartilage.