Keratinocyte growth factor (KGF) has been implicated in wound re-epithelialization and branching morphogenesis of several organs. To determine whether KGF induces these effects via induction of matrix metalloproteinase expression we have analysed the effect of KGF on the expression of stromelysin-2 in cultured HaCaT keratinocytes. Here we show a strong induction of stromelysin-2 mRNA within 5–8 h of stimulation of these cells with KGF. The degree of induction was similar to that achieved by treatment with epidermal growth factor or tumour necrosis factor α, whereas the stimulatory effect of transforming growth factor β1 was even stronger. To determine whether the induction of stromelysin-2 expression by growth factors and cytokines might be important for wound healing, we analysed the expression of this gene during the healing process of full-thickness excisional wounds in mice. Whereas stromelysin-2 mRNA could hardly be detected in unwounded skin, a biphasic induction was seen after injury and highest levels were found at days 1 and 5 after wounding. Hybridization in situ revealed the presence of stromelysin-2 mRNA in basal keratinocytes at the wound edge but not in the underlying mesenchymal tissue. During impaired wound healing as seen in glucocorticoid-treated mice, stromelysin-2 expression was significantly increased compared with untreated control mice. Taken together, these results suggest that correct regulation of this broad-spectrum metalloproteinase might be important for normal repair.