Glioblastoma multiforme (GBM) is the most aggressive and the commonest primary brain tumor with a tendency for local invasiveness. The pathways of neoplasia, invasion and inflammation are inextricably linked in cancer and aberrations in several regulatory pathways for these processes have been identified. Here we have studied the FAT1 (Homo sapiens FAT tumor-suppressor homolog 1 (Drosophila)) gene to identify its role in the tumorigenecity of the gliomas. The expression of FAT1 was found to be high in grade IV glioma cell lines (U87MG, A172, U373MG and T98G) but low in grade III glioma cell lines (GOS3 and SW1088). Two cell lines (U87MG and A172) with high FAT1 expression were chosen for in vitro FAT1-knockdown studies. FAT1 knockdown by small interfering RNA resulted in decreased migration and invasion of both the cell lines along with increased expression of the tumor-suppressor gene programmed cell death 4 (PDCD4). Increased PDCD4 expression led to the attenuation of activator protein-1 (AP- 1) transcription by inhibiting c-Jun phosphorylation and resulted in concomitant decrease in the expression of AP-1-target genes like MMP3, VEGF-C and PLAU, the pro-inflammatory regulator COX-2 and cytokines IL1b and IL-6. Conversely, simultaneous silencing of PDCD4 and FAT1 in these cells significantly enhanced AP-1 activity and expression of its target genes, resulting in increase in mediators of inflammation and in enhanced migratory and invasive properties of the cells. We also observed a negative correlation between the expression of FAT1 and PDCD4 (P = 0.0145), a positive correlation between the expression of FAT1 and COX-2 (P = 0.048) and a similar positive trend between FAT1 and IL-6 expression in 35 primary human GBM samples studied. Taken together, this study identifies a novel signaling mechanism mediated by FAT1 in regulating the activity of PDCD4 and thereby the key transcription factor AP-1, which then affects known mediators of neoplasia and inflammation.