A human placenta cDNA expression library was screened for genes inducing flat reversion when transfected into a v-K-ras-transformed NIH3T3 cell line, DT. One such gene was found to encode a Kunitz-type serine protease inhibitor, tissue factor pathway inhibitor-2 (TFPI-2). While the TFPI-2 mRNA can be detected in normal human fibroblasts (MRC-5), it is down-regulated in MRC-5 cells expressing an activated H-ras oncogene and in the human fibrosarcoma cell line, HT1080. Restored expression of the TFPI-2 gene in HT1080 cells resulted in the suppression of matrix invasion activity in vitro with concomitant decrease in the relative amount of active matrix metalloproteinase-2 secreted from the cells. When DT cells were cultured in the presence of conditioned medium and extracellular matrix prepared from TFPI-2-transfected HT1080 cells, increased attachment and flat reversion were observed. These results suggest that TFPI-2 may be required for the maintenance of the integrity of extracellular matrix in normal tissues and its down-regulation as a result of oncogene activation may contribute to the malignant phenotypes of tumor cells.