Xenon-129 biosensors offer an attractive alternative to conventional MRI contrast agents due to the chemical shift sensitivity and large nuclear magnetic signal of hyperpolarized ¹²⁹Xe. Here, we report the first enzyme-responsive ¹²⁹Xe NMR biosensor. This compound was synthesized in 13 steps by attaching the consensus peptide substrate for matrix metalloproteinase-7 (MMP-7), an enzyme that is upregulated in many cancers, to the xenon-binding organic cage, cryptophane-A. The final coupling step was achieved on solid support in 80−92% yield via a copper (I)-catalyzed [3+2] cycloaddition. In vitro enzymatic cleavage assays were monitored by HPLC and fluorescence spectroscopy. The biosensor was determined to be an excellent substrate for MMP-7 (K_M = 43 μM, V_max = 1.3 × 10^-8 M s^-1, k_cat/K_M = 7200 M^-1 s^-1). Enzymatic cleavage of the tryptophan-containing peptide led to a dramatic decrease in Trp fluorescence, λ_max = 358 nm. Stern−Volmer analysis gave an association constant of 9000 ± 1000 M^-1 at 298 K between the cage and Trp-containing hexapeptide under enzymatic assay conditions. Most promisingly, ¹²⁹Xe NMR spectroscopy distinguished between the intact and cleaved biosensors with a 0.5 ppm difference in chemical shift. This difference most likely reflected a change in the electrostatic environment of ¹²⁹Xe, caused by the cleavage of three positively charged residues from the C-terminus. This work provides guidelines for the design and application of new enzyme-responsive ¹²⁹Xe NMR biosensors.