During invasion and metastasis, cancer cells interact closely with the extracellular matrix molecules by attachment, degradation, and migration. We demonstrated previously the local degradation of fluorescently labeled gelatin matrix by cancer cells at invasive membrane protrusions, called invadopodia. Using the newly developed quantitative fluorescence-activated cell sorting-phagocytosis assay and image analysis of localized degradation of fluorescently labeled matrix, we document here that degradation and site-specific removal of cross-linked gelatin matrix is correlated with the extent of phagocytosis in human breast cancer cells. A higher phagocytic capacity is generally associated with increasing invasiveness, documented in other invasion and motility assays as well. Gelatin phagocytosis is time and cell density dependent, and it is mediated by the actin cytoskeleton. Most of the intracellular gelatin is routed to actively acidified vesicles, as demonstrated by the fluorescent colocalization of gelatin with acidic vesicles, indicating the intracellular degradation of the phagocytosed matrix in lysosomes. We show here that normal intracellular routing is blocked after treatment with acidification inhibitors. In addition, the need for partial proteolytic degradation of the matrix prior to phagocytosis is demonstrated by the inhibition of gelatin phagocytosis with different serine and metalloproteinase inhibitors and its stimulation by conditioned medium containing the matrix metalloproteinases MMP-2 and MMP-9. Our results demonstrate that phagocytosis of extracellular matrix is an inherent feature of breast tumor cells that correlates with and may even directly contribute to their invasive capacity. This assay is useful for screening and evaluating potential anti-invasive agents because it is fast, reproducible, and versatile.