Testican family proteins are putative extracellular heparan/chondroitin sulfate proteoglycans of unknown function. We identified recently N-Tes, which is a product of testican 3 splicing variant gene, as an inhibitor of membrane-type matrix metalloproteinases (MT-MMPs). The inhibitory function is common among testican family members except for testican 2, which was shown to uniquely abolish inhibition of MT1-MMP- or MT3-MMP-mediated pro-MMP-2 activation by other testican family members. Testican 2 inactivates N-Tes by binding to the COOH-terminal extracellular calcium-binding domain of N-Tes through its NH(2)-terminal unique domain as demonstrated by coimmunoprecipitation analysis, and, thus, testican 2 was unable to inactivate a N-Tes deletion mutant lacking the extracellular calcium-binding domain (N-Tes-Delta 122). Migration of U251 cells on collagen, which was dependent on MT1-MMP activity under serum-free condition, was inhibited by N-Tes or N-Tes-Delta 122 deposited on collagen. Testican 2 was not incorporated into collagen by itself, and was deposited only in the presence of N-Tes, suggesting that testican 2 binds to N-Tes deposited on collagen. Binding of testican 2 to N-Tes deposited on collagen allowed migration of cells expressing MT1-MMP. Unlike wild-type N-Tes, N-Tes-Delta 122 did not bind to testican 2, and, thus, expression of testican 2 did not recover cell migration blocked by N-Tes-Delta 122. In situ hybridization showed that neurons are a major source of all of the testican family members in the normal brain. The quantitative reverse transcription-PCR analysis demonstrated that all of the testican family members are expressed prominently in normal brain, and their expression levels decrease as tumor grade increases. The expression level of testican 2 was the highest among testican family members regardless of histological grade of astrocytic tumors. These results suggest that abundant distribution of testican 2 may contribute to glioma invasion by inactivating other testican family members including N-Tes, which all inhibit MT-MMPs. We propose that N-Tes-Delta 122, which is resistant to testican 2, may have therapeutic potential as a barrier against glioma invasion.