The goal of the present study was to assess the relative importance of receptor-bound and secreted plasminogen activator urokinase (u-PA) in generating cell-surface plasmin and fostering destruction of normal tissue by tumor cells. We first showed that active site-inhibited u-PA could displace endogenous u-PA from the surface of the human colon adenocarcinoma cell line HCT 116. We then prepared expression vectors for u-PA and for a mutant molecule in which the codon for the active site serine residue was changed to encode alanine. Expression of non-functional mutant u-PA decreased the level of cell-bound active u-PA by more than 95% via a mechanism that involved competition for receptor sites. Decreased cell-surface u-PA activity was associated with a decrease in cell-bound plasmin activity to undetectable levels, suggesting that receptor-bound u-PA plays an important role in the generation of plasmin on the cell surface. Transfectants that secreted eightfold to 20-fold elevated levels of active wild-type u-PA showed approximately 50% increases in cell-associated u-PA and only twofold to fourfold increases in cell-associated plasmin, suggesting that the role of secreted u-PA in generating cell-surface plasmin activity was relatively minor. In parent cells and both types of transfectants there was a good correlation between the amount of plasmin bound to the tumor cell surface and the extent to which a basement membrane substrate was degraded. These studies show that receptor-bound u-PA provides an efficient mechanism for plasmin generation on the surface of tumor cells, which, in turn, contributes significantly to their degradative potential.