Lymphatic invasion and accumulation of continuous collagen bundles around tumor cells are associated with poor melanoma prognosis, but the underlying mechanisms and molecular determinants have remained unclear. We show here that a copy-number gain or overexpression of the membrane-type matrix metalloproteinase MMP16 (MT3-MMP) is associated with poor clinical outcome, collagen bundle assembly around tumor cell nests, and lymphatic invasion. In cultured WM852 melanoma cells derived from human melanoma metastasis, silencing of MMP16 resulted in cell-surface accumulation of the MMP16 substrate MMP14 (MT1-MMP) as well as L1CAM cell adhesion molecule, identified here as a novel MMP16 substrate. When limiting the activities of these trans-membrane protein substrates toward pericellular collagen degradation, cell junction disassembly, and blood endothelial transmigration, MMP16 supported nodular-type growth of adhesive collagen-surrounded melanoma cell nests, coincidentally steering cell collectives into lymphatic vessels. These results uncover a novel mechanism in melanoma pathogenesis, whereby restricted collagen infiltration and limited mesenchymal invasion are unexpectedly associated with the properties of the most aggressive tumors, revealing MMP16 as a putative indicator of adverse melanoma prognosis.