Proprotein convertases (PCs) have been implicated in tumor cell invasion by processing a variety of substrates including matrix metalloproteinases (MMPs). PACE4, a member of the family of PCs was shown to enhance mouse skin carcinoma progression by increasing tumor cell invasiveness. However, the effects of PACE4 on malignant conversion have not been investigated. In the present study we address the possible role of PACE4 as a trigger of malignant conversion by transfecting with a full-length PACE4 cDNA, three keratinocyte cell lines with no or little tumorigenic potential, i.e. non-tumorigenic BALB/MK-2 cells, tumorigenic non-invasive MT1/2 cells and tumorigenic moderately invasive p117 mouse skin keratinocytes. Overexpression of PACE4 led to a significant increase in the processing of stromelysin-3, a well-characterized substrate of this PC. When assayed for invasive ability, the PACE4-transfected cells were invasive both in vitro and in vivo, whereas their control counterparts were not. In addition, an enhanced processing ability of MT2-MMP a known substrate of PCs was detected in the PACE4-transfected cells. This was accompanied by MMP-2 and MMP-9 activation in PACE4 transfectants. Invasion and MMP processing were remarkably reduced when PACE4 was inhibited with a specific antibody. By triggering the processing of crucial invasion-related proteases, PACE4 is not only able to enhance the invasive ability of malignant cells as demonstrated previously, but also played a significant role in converting non-invasive keratinocytes into malignant cells.