Although fibroblasts play an essential part during the wound healing response, the mechanisms by which they mediate tissue remodelling and contraction are still unclear. Using live cell and matrix imaging within 3D free-floating fibroblast-populated collagen lattices as a model for tissue contraction, we compared the behaviour of a range of fibroblasts with low and high contraction abilities and analysed the effect of the broad spectrum MMP-inhibitor GM6001 on cell behaviour and matrix contraction. We identified two mechanisms underlying matrix contraction, one via direct cell-mediated contractile activity, the second through matrix degradation. These appear to be linked to cell morphology and regulated by the collagen concentration within the matrix. Cells with a rounded morphology proliferated in the matrix but did not remodel it efficiently, resulting in a poor ability to contract matrices. Cells with an elongated morphology showed higher levels of protrusive activity, leading to efficient matrix remodelling and contraction. GM6001 inhibited week-long matrix contraction to various extents with the different cell lines. However, quantitative analysis of the cell protrusive activity showed that GM6001 consistently decreased cell dynamics in 3D by about 20%, and this was correlated with a significant reduction in early matrix contraction. Overall our results suggest that although fibroblast-mediated matrix contraction depends on both cell dynamics and MMP-mediated matrix degradation, the efficiency of GM6001 treatment in preventing contraction might be linked to a direct effect on cell dynamics.