The collagenase subfamily of matrix metalloproteinases (MMP) have important roles in the remodelling of collagenous matrices. The proteinase-activated receptor (PAR) family have a unique mechanism of activation requiring proteolysis of an extracellular domain forming a neo-N terminus which acts as a tethered ligand, a process that has been associated with the development of arthritis. Canonical PAR2 activation typically occurs via a serine proteinase at Arg36–Ser37, but other proteinases can cleave PARs downstream of the tethered ligand and “disarm” the receptor. To identify additional cleavage sites within PAR2, we synthesised a 42-amino acid peptide corresponding to the extracellular region. We observed that all three soluble MMP collagenases - MMP-1, MMP-8, and MMP-13 - cleave PAR2 and discovered a novel cleavage site (Ser37–Leu38). Metalloproteinases from resorbing bovine nasal cartilage and recombinant human collagenases could cleave a quenched fluorescent peptide mimicking the canonical PAR2 activation region, and kinetic constants were determined. In PAR2-overexpressing SW1353 chondrocytes, we demonstrated that the activator peptide SLIGKV-NH2 induces rapid calcium flux, inflammatory gene expression (including MMP1 and MMP13), and the phosphorylation of extracellular signal–regulated kinase (ERK) and p38 kinase. The corresponding MMP cleavage–derived peptide (LIGKVD-NH2) exhibited no canonical activation, however we observed phosphorylation of ERK, providing evidence of biased agonism. Importantly, we demonstrated that pre-incubation with active MMP-1 reduced downstream PAR2 activation by a canonical activator, matriptase, but not SLIGKV-NH2. These results support a role for collagenases as proteinases capable of disarming PAR2, revealing a mechanism which suppresses PAR2-mediated inflammatory responses.