Abstract Matrix metalloproteinases (MMPs) are induced during inflammatory responses and are important for immune regulation, angiogenesis, wound healing, and tissue remodeling. Expression of MMPs needs to be tightly controlled to avoid excessive tissue damage. In this study, we investigated the regulation of MMP expression by inflammatory factors in primary human monocytes and macrophages. IFN-γ, which augments inflammatory cytokine production in response to macrophage-activating factors such as TLR ligands, instead broadly suppressed TLR-induced MMP expression. Inhibition of MMP expression was dependent on STAT1 and required de novo protein synthesis. IFN-γ strongly enhanced TLR-induced expression of the transcriptional repressor activating transcription factor (ATF-3) in a STAT1-dependent manner, which correlated with recruitment of ATF-3 to the endogenous MMP-1 promoter as detected by chromatin immunoprecipitation assays. RNA interference experiments further supported a role for ATF-3 in suppression of MMP-1 expression. In addition, IFN-γ suppressed DNA binding by AP-1 transcription factors that are known to promote MMP expression and a combination of supershift, RNA interference and overexpression experiments implicated AP-1 family member Fra-1 in the regulation of MMP-1 expression. These results define an IFN-γ-mediated homeostatic loop that limits the potential for tissue damage associated with inflammation, and identify transcriptional factors that regulate MMP expression in myeloid cells in inflammatory settings.