Cathepsin D, a lysosomal protease, is overexpressed in primary breast cancer and associated with increased risk of metastasis. We have shown previously by transfection in rat tumor cells that overexpression of cathepsin D increased both experimental metastasis in nude mice and in vitro proliferation under low-serum conditions. In this study, we used the transfected cell lines to investigate the mechanism by which cathepsin D prevents density-dependent arrest of cell proliferation. This effect was not associated with a general alteration of cell-substratum or cell-cell adhesiveness. As shown by coculture and conditioned media experiments, control cells reaching saturation density released inhibitory activity that was able to prevent the growth of control or cathepsin D transfectants and decreased the cloning efficiency of normal rat kidney fibroblasts in agar. By contrast, in media from two cathepsin D-transfected cell lines, this inhibitory activity was markedly reduced. Cathepsin D overexpression did not affect cell sensitivity to the inhibitor but modified the secretion of several proteins. The increase in cell density appeared to be due to intracellular maturation of cathepsin D since it was reversed by amine treatment that neutralizes the pH of acidic compartments within the cells. Moreover, the addition of secreted pro-cathepsin D was unable to increase the saturation density of control clones. Finally, the inhibitory factor was partially characterized as a heat-labile, secreted protein. We conclude that cathepsin D overexpression increases the growth of cancer cells to a higher density via an intracellular mechanism, leading to a decreased secretion of growth inhibitor(s).