We have analyzed the role of plasminogen-activator inhibitor type 1 (PAI-1) in the regulation of tumor cell-mediated extracellular matrix degradation. Immunocytochemical analysis revealed PAI-1 associated with microgranular and fibrillar material of the extracellular matrix and demonstrated the presence of PAI-1 as a cell surface-associated antigen. Transforming growth factor beta significantly reduced matrix degradation mediated by HT-1080 human fibrosarcoma cells. This inhibition was correlated with an increase in PAI-1 antigen expression, whereas urinary-type plasminogen activator (u-PA) secretion was unaffected. In this experimental system, PAI-1 regulated extracellular matrix breakdown, as added PAI-1 inhibited matrix solubilization, whereas monoclonal antibodies to PAI-1 increased it. A cell line (LPAI) producing high levels of biologically active PAI-1 was established by transfection of a human PAI-1 cDNA clone into mouse L cells. Coculture experiments demonstrated that LPAI cells prevented matrix degradation by Lu-PA cells (L cells expressing high levels of u-PA) or Co-115 human colon carcinoma cells (expressing tissue-type plasminogen activator). These results indicate that PAI-1 may play a critical role in the regulation of extracellular matrix degradation during tumor cell invasion.