The Clostridium histolyticum 116-kDa collagenase consists of four segments, S1, S2a, S2b, and S3. A 98-kDa gelatinase, which can degrade denatured but not native collagen, lacks the C-terminal fragment containing a part of S2b and S3. In this paper we have investigated the function of the C-terminal segments using recombinant proteins. Full-length collagenase degraded both native type I collagen and a synthetic substrate, Pz-peptide, while an 88-kDa protein containing only S1 and S2a (S1S2a) degraded only Pz-peptide. Unlike the full-length enzyme, S1S2a did not bind to insoluble type I collagen. To determine the molecular determinant of collagen binding activity, various C-terminal regions were fused to the C terminus of glutathione S-transferase. S3 as well as S2bS3 conferred collagen binding. However, a glutathione S-transferase fusion protein with a region shorter than S3 exhibited reduced collagen binding activity. S3 liberated from the fusion protein also showed collagen binding activity, but not S2aS2b or S2b. S1 had 100% of the Pz-peptidase activity but only 5% of the collagenolytic activity of the full-length collagenase. These results indicate that S1 and S3 are the catalytic and binding domains, respectively, and that S2a and S2b form an interdomain structure.