Matrix metalloproteinases (MMPs) mediate demyelination and breakdown of the blood-nerve barrier in peripheral neuropathies. Matrix metalloproteinases and tissue inhibitor of metalloproteinase 1 gene expression and secretion were studied in cells of the human Schwann cell line ST88-14 stimulated with Mycobacterium leprae and tumor necrosis factor (TNF) and in nerve biopsies from patients with neural leprosy (n = 21) and nonleprous controls (n = 3). Mycobacterium leprae and TNF induced upregulation of MMP-2 and MMP-9 and increased secretion of these enzymes in cultured ST88-14 cells. The effects of TNF and M. leprae were synergistic, and anti-TNF antibody blockage partially inhibited this synergistic effect. Nerves with inflammatory infiltrates and fibrosis displayed higher TNF, MMP-2, and MMP-9 mRNA than controls. Leprous nerve biopsies with no inflammatory alterations also exhibited higher MMP-2 and MMP-9; tissue inhibitor of metalloproteinase 1 was significantly higher in biopsies with fibrosis and inflammation. Immunohistochemical double labeling of the nerves demonstrated that the MMPs were mainly expressed by macrophages and Schwann cells. The biopsies with endoneurial inflammatory infiltrates and epithelioid granulomas had the highest levels of MMP-2 and MMP-9 mRNA detected. Together, these results suggest that M. leprae and TNF may directly induce Schwann cells to upregulate and secrete MMPs regardless of the extent of inflammation in leprous neuropathy.