Myogenic differentiation in adult muscle is normally suppressed and can be activated by myogenic cues in a subset of activated satellite cells. The switch mechanism that turns myogenesis on and off is not defined. In the present study, we demonstrate that tissue inhibitor of metalloproteinase 3 (TIMP3), the endogenous inhibitor of TNFα-converting enzyme (TACE), acts as an on–off switch for myogenic differentiation by regulating autocrine TNFα release. We observed that constitutively expressed TIMP3 is transiently downregulated in the satellite cells of regenerating mouse hindlimb muscles and differentiating C2C12 myoblasts. In C2C12 myoblasts, perturbing TIMP3 downregulation by overexpressing TIMP3 blocks TNFα release, p38 MAPK activation, myogenic gene expression and myotube formation. TNFα supplementation at a physiological concentration rescues myoblast differentiation. Similarly, in the regenerating soleus, overexpression of TIMP3 impairs release of TNFα and myogenic gene expression, and delays the formation of new fibers. In addition, downregulation of TIMP3 is mediated by the myogenesis-promoting microRNA miR-206. Thus, TIMP3 is a physiological regulator of myogenic differentiation.