Matriptase is an epithelial-derived, cell surface serine protease. This protease activates hepatocyte growth factor (HGF) and urokinase plasminogen activator (uPA), two proteins thought to be involved in the growth and motility of cancer cells, particularly carcinomas, and in the vascularization of tumors. Thus, matriptase may play an important role in the progression of carcinomas, such as breast cancer. We examined the regulation of activation of matriptase in human breast cancer cells, in comparison to non-transformed mammary epithelial cells 184A1N4 and MCF-10A. Results clearly indicated that unlike non-transformed mammary epithelial cells, breast cancer cells do not respond to the known activators of matriptase, serum and sphingosine 1-phosphate (S1P). Similar levels of activated matriptase were detected in breast cancer cells, grown in the presence or absence of S1P. However, up to five-fold higher levels of activated matriptase were detected in the conditioned media from the cancer cells grown in the absence of serum and S1P, when compared to non-transformed mammary epithelial cells. S1P also induces formation of cortical actin structures in non-transformed cells, but not in breast cancer cells. These results show that in non-transformed cells, S1P induces a rearrangement of the actin cytoskeleton and stimulates proteolytic activity on cell surfaces. In contrast, S1P treatment of breast cancer cells does not activate matriptase, and instead these cells constitutively activate the protease. In addition, breast cancer cells respond differently to S1P in terms of the regulation of actin cytoskeletal structures. Matriptase and its cognate inhibitor, HGF activator inhibitor 1 (HAI-1) colocalize on the cell periphery of breast cancer cells and form stable complexes in the extracellular milieu, suggesting that the inhibitor serves to prevent undesired proteolysis in these cells. Finally, we demonstrate that treatment of T-47D cells with epidermal growth factor (EGF), which promotes cell ruffling, stimulates increased accumulation of activated matriptase at the sites of membrane ruffling, suggesting a possible functional role at these sites.