Prostate cancers metastasize to bone leading to osteolysis. Here we assessed proteolysis of DQ-collagen I (a bone matrix protein) and, for comparison, DQ-collagen IV, by living human prostate carcinoma cells in vitro. Both collagens were degraded, and this degradation was reduced by inhibitors of matrix metallo, serine, and cysteine proteases. Because secretion of the cysteine protease cathepsin B is increased in human breast fibroblasts grown on collagen I gels, we analyzed cathepsin B levels and secretion in prostate cells grown on collagen I gels. Levels and secretion were increased only in DU145 cells--cells that expressed the highest baseline levels of cathepsin B. Secretion of cathepsin B was also elevated in DU145 cells grown in vitro on human bone fragments. We further investigated the effect of the bone microenvironment on cathepsin B expression and activity in vivo in a SCID-human model of prostate bone metastasis. High levels of cathepsin B protein and activity were found in DU145, PC3, and LNCaP bone tumors, although the PC3 and LNCaP cells had exhibited low cathepsin B expression in vitro. Our results suggest that tumor-stromal interactions in the context of the bone microenvironment can modulate the expression of the cysteine protease cathepsin B.