Fibroblasts located adjacent to the tumor [cancer-associated fibroblasts (CAFs)] that constitute a large proportion of the cancer-associated stroma facilitate the transformation process. In this study, we compared the biological behavior of CAFs that were isolated from a prostate tumor to their normal-associated fibroblast (NAF) counterparts. CAFs formed more colonies when seeded at low cell density, exhibited a higher proliferation rate and were less prone to contact inhibition. In contrast to the general notion that high levels of alpha-smooth muscle actin serve as a marker for CAFs, we found that prostate CAFs express it at a lower level compared with prostate NAFs. Microarray analysis revealed a set of 161 genes that were altered in CAFs compared with NAFs. We focused on whey acidic protein four-disulfide core domain 1 (WFDC1), a known secreted protease inhibitor, and found it to be downregulated in the CAFs. WFDC1 expression was also dramatically downregulated in highly prolific mesenchymal cells and in various cancers including fibrosarcomas and in tumors of the lung, bladder and brain. Overexpression of WFDC1 inhibited the growth rate of the fibrosarcoma HT1080 cell line. Furthermore, WFDC1 level was upregulated in senescent fibroblasts. Taken together, our data suggest an important role for WFDC1 in inhibiting proliferation of both tumors and senescent cells. Finally, we suggest that the downregulation of WFDC1 might serve as a biomarker for cellular transformation.