Gene expression changes associated with the conversion of squamous cell carcinoma (SCC) to a more advanced malignant spindle cell carcinoma (SPCC) were determined by differential display. Using an animal model of human SCC progression, we provide evidence of increased PACE4 expression in SPCC cell lines and primary tumors induced by chemical carcinogenesis protocols, thus implicating this proprotein convertase in the process of tumor progression. Exogenous overexpression of PACE4 cDNA in mouse SCC cells of low invasive ability resulted in enhanced tumor cell invasiveness that was absent in parental or mock-transfected SCC cells. In addition, the PACE4-transfected cells acquired the ability to process prostromelysin 3 into its active enzyme form. Taken together, these results show that up-regulation of PACE4 expression is associated with SCC conversion to SPCC and suggests that activation of essential PACE4 substrates, such as the metalloproteinase stromelysin 3, is required for tumor cell invasion.