Pancreatic ductal adenocarcinoma (PDAC) is associated with an intense fibrotic reaction around the tumor known as desmoplastic reaction. This tissue is composed of interstitial matrix, predominantly type I collagen, together with proliferating fibroblastic cells. Despite the recognized importance of tumor-stromal interactions, very little is known about the interactions among pancreatic cells, myofibroblasts, and the interstitial matrix. The current study was undertaken to test the hypothesis that the desmoplastic reaction alters PDAC gene expression and cellular behavior. Evaluation of human pancreatic specimens showed increased fibrosis and enhanced membrane type 1-matrix metalloproteinase (MT1-MMP) expression in tumor specimens compared with normal pancreas. Using an in vitro model of tumor cell-stromal interactions, type I collagen and the extracellular matrix deposited by pancreatic fibroblasts and PDAC cells regulated motility of human papillomavirus-immortalized human pancreatic ductal epithelial (HPDE) cells. These "stromal" matrices also regulated MT1-MMP expression by HPDE cells, without affecting the expression of tissue inhibitor of metalloproteinase 2. Treatment with transforming growth factor-beta1 (TGF-beta1) type I receptor kinase inhibitors and function-blocking anti-TGF-beta1 antibody abrogated matrix-mediated MT1-MMP induction. TGF-beta1 also promoted MT1-MMP-dependent migration by HPDE cells. Moreover, compared with normal tissue, there was increased TGF-beta1 signaling in grade 3 tumor specimens as shown by increased phospho-Smad2 staining. These data show that the crosstalk between cancer cells and stromal elements mediated by TGF-beta1 influences cell surface- and pericellular matrix-degrading potential in vitro and may contribute to pancreatic cancer progression in vivo.