There is accumulating evidence of the critical role of tumor stroma in carcinoma development and progression. We have studied the significance of stromal components in regulating matrix metalloproteinases in different stages of human skin carcinogenesis using the HaCaT keratinocyte transformation model. Expression of matrix metalloproteinase 1 and matrix metalloproteinase 13 was analyzed in nontumorigenic HaCaT cells and their c-Ha-ras-transformed tumorigenic clones, benign A-5 and malignant A-5RT3, in response to different matrices and cocultured fibroblasts as well as in transplants in nude mice. When cultured on a collagen type I gel, expression of matrix metalloproteinase 1 mRNA was induced in A-5 and A-5RT3 but less in HaCaT cells, whereas matrix metalloproteinase 13 was only induced in A-5 cells. Induction of matrix metalloproteinase 1 by collagen was also observed in two other malignant HaCaT-ras clones as well as in 2/2 primary squamous cell carcinoma lines. In organotypic cocultures with skin fibroblasts, matrix metalloproteinase 1 mRNA and protein was further strongly upregulated in A-5RT3 cells but less in HaCaT and A-5 cells. Importantly, matrix metalloproteinase 1 was also upregulated in fibroblasts when cocultured with A-5RT3 cells. In vivo, A-5RT3 transplants and subcutaneous tumors expressed matrix metalloproteinase 1 mRNA consistently, preferentially at the tumor front to the mouse stroma. In contrast, matrix metalloproteinase 1 expression was absent in the transplants of A-5 cells and HaCaT cells. Thus, our results demonstrate the specific induction of matrix metalloproteinase 1 in malignant keratinocytes by fibroblasts, supposedly through paracrine-acting factors, and a reciprocally enhanced expression in fibroblasts. This further substantiates the important role of tumor stroma in regulating the expression of matrix metalloproteinase 1, a major matrix-degrading proteinase implicated in tumor invasion.