Platelet-derived growth factor (PDGF)/PDGFRbeta-dependent investment of the vascular endothelium by mural cells (i.e., pericytes and vascular smooth muscle cells; VSMCs) is critical for normal vessel wall structure and function. In the developing vasculature, mural cell recruitment is associated with the functionally undefined expression of the type I transmembrane proteinase, membrane-type 1 matrix metalloproteinase (MT1-MMP). In this paper, using VSMCs and tissues isolated from gene-targeted mice, we identify MT1-MMP as a PDGF-B-selective regulator of PDGFRbeta-dependent signal transduction and mural cell function. In VSMCs, catalytically active MT1-MMP associates with PDGFRbeta in membrane complexes that support the efficient induction of mitogenic signaling by PDGF-B in a matrix metalloproteinase inhibitor-sensitive fashion. In contrast, MT1-MMP-deficient VSMCs display PDGF-B-selective defects in chemotaxis and proliferation as well as ERK1/2 and Akt activation that can be rescued in tandem fashion following retroviral transduction with the wild-type protease. Consistent with these in vitro findings, MT1-MMP-deficient brain tissues display a marked reduction in mural cell density as well as abnormal vessel wall morphology similar to that reported in mice expressing PDGF-B or PDGFRbeta hypomorphic alleles. Together, these data identify MT1-MMP as a novel proteolytic modifier of PDGF-B/PDGFRbeta signal transduction that cooperatively regulates vessel wall architecture in vivo.