At sites of vessel-wall injury, vascular smooth muscle cells (VSMCs) can dedifferentiate to express an invasive and proliferative phenotype, which contributes to the development of neointimal lesions and vascular disorders. Herein, we demonstrate that the loss of the VSMC differentiated phenotype, as the repression of contractile-protein expression, is correlated with a dramatic upregulation of the membrane-anchored matrix metalloproteinase MT1-MMP (also known as MMP14 and membrane-type 1 matrix metalloproteinase). Matrix metalloproteinase (MMP) inhibitors or MT1-MMP deficiency led to attenuated VSMC dedifferentiation, whereas the phenotypic switch was re-engaged following the restoration of MT1-MMP activity in MT1-MMP(-/-) cells. MT1-MMP-dependent dedifferentiation was mediated by the PDGF-BB-PDGFRbeta pathway in parallel with the proteolytic processing of the multifunctional LDL receptor-related protein LRP1 and the dynamic internalization of a PDGFRbeta-beta3-integrin-MT1-MMP-LRP1 multi-component complex. Importantly, LRP1 silencing allowed the PDGF-BB-induced dedifferentiation program to proceed in the absence of MT1-MMP activity, supporting the role of unprocessed LRP1 as a gatekeeper of VSMC differentiation. Hence, MT1-MMP and LRP1 serve as a new effector-target-molecule axis that controls the PDGF-BB-PDGFRbeta-dependent VSMC phenotype and function.