BackgroundProteolysis of the histone H3 N-terminal tail (H3NT) is an evolutionarily conserved epigenomic feature of nearly all eukaryotes, generating a cleaved H3 product that is retained in ~ 5–10% of the genome. Although H3NT proteolysis within chromatin was first reported over 60 years ago, the genomic sites targeted for H3NT proteolysis and the impact of this histone modification on chromatin structure and function remain largely unknown. The goal of this study was to identify the specific regions targeted for H3NT proteolysis and investigate the consequence of H3NT “clipping” on local histone post-translational modification (PTM) dynamics.ResultsLeveraging recent findings that matrix metalloproteinase 2 (MMP-2) functions as the principal nuclear H3NT protease in the human U2OS osteosarcoma cell line, a ChIP-Seq approach was used to map MMP-2 localization genome wide. The results indicate that MMP-2 is selectively targeted to the transcription start sites (TSSs) of protein coding genes, primarily at the + 1 nucleosome. MMP-2 localization was exclusive to highly expressed genes, further supporting a functional role for H3NT proteolysis in transcriptional regulation. MMP-2 dependent H3NT proteolysis at the TSSs of these genes resulted in a > twofold reduction of activation-associated histone H3 PTMs, including H3K4me3, H3K9ac and H3K18ac. One of genes requiring MMP-2 mediated H3NT proteolysis for proficient expression was the lysosomal cathepsin B protease (CTSB), which we discovered functions as a secondary nuclear H3NT protease in U2OS cells.ConclusionsThis study revealed that the MMP-2 H3NT protease is selectively targeted to the TSSs of active protein coding genes in U2OS cells. The resulting H3NT proteolysis directly alters local histone H3 PTM patterns at TSSs, which likely functions to regulate transcription. MMP-2 mediated H3NT proteolysis directly activates CTSB, a secondary H3NT protease that generates additional cleaved H3 products within chromatin.Supplementary InformationThe online version contains supplementary material available at 10.1186/s13072-023-00491-w.