Matriptase is a member of an expanding group of type II transmembrane serine proteases. Recently, much has been learned about the biochemistry, cellular biology, normal tissue physiology, and human pathology of this protease, and of its inhibitor, termed the hepatocyte growth factor inhibitor-1 (HAI-1). This review examines the recent literature that has characterized the regulation of matriptase and HAI-1 with an emphasis on the molecular mechanisms governing its zymogen activation, inhibition by HAI-1, and ectodomain shedding.