Molecules comprising the extracellular matrix (ECM), and the family of matrix metalloproteinases (MMPs) that regulate them, perform essential functions during neuroplasticity in both developing and adult nervous systems, including substrate guidance during neuritogenesis and the establishment of boundaries for axonal terminal fields. MMP proteolysis of ECM molecules may perform a permissive or inductive role in fiber remodeling and synaptogenesis initiated by deafferentation. This study examined functional and structural effects of MMP inhibition during the early phases of deafferentation-induced sprouting, characterizing components of the degeneration/proliferation cycle that may be dependent on MMP activity. Adult rats received unilateral lesions of the entorhinal cortex to induce collateral sprouting of the crossed temporodentate fiber pathway. This was followed by intraventricular infusion of the MMP inhibitor FN-439 (2.9 mg/kg) or saline vehicle. After 7 d postlesion, rats underwent in vivo electrophysiological recording or histological processing for electron microscopic analysis. Lesioned rats receiving vehicle exhibited normal sprouting and synaptogenesis, with the emergence of the capacity for long-term potentiation (LTP) within the sprouting pathway, and the successful clearance of degenerating terminals with subsequent synaptic proliferation. In contrast, lesioned rats receiving the MMP inhibitor failed to develop the capacity for LTP and showed persistent cellular debris. Current source density analysis also revealed an FN-439-induced disruption of the current sink, normally localized to the middle region of the granule cell dendrites, corresponding to the terminal field of the crossed temporodentate fibers. These results establish a role for MMP-dependent processes in the deafferentation/sprouting cycle.