During progression of melanoma, loss of the cell-cell adhesion molecule E-cadherin contributes to uncontrolled growth and invasive behavior of transformed melanocytes. Secreted protein acidic and rich in cysteine (SPARC) is a nonstructural matricellular protein that regulates cell-matrix interactions leading to alterations in cell adhesion and proliferation. Overexpression of SPARC has been associated with progression of various cancers, including melanoma; however, its role in primary tumor development is not well defined. We show that normal human melanocytes overexpressing SPARC adopt a fibroblast-like morphology, concomitant with loss of E-cadherin and P-cadherin expression, and increased expression of mesenchymal markers. Concurrent with these changes, SPARC expression stimulates melanocyte motility and melanoma cell invasion. Expression of SPARC results in transcriptional down-regulation of E-cadherin that correlates with induction of Snail, a repressor of E-cadherin. Conversely, SPARC depletion leads to up-regulation of E-cadherin and reduces Snail levels, and SPARC-null cells exhibit a marked change in their mesenchymal phenotype. Finally, analysis of SPARC, Snail, and E-cadherin levels in melanocytes and malignant melanoma cell lines further supports the functional relationship among these proteins during melanoma progression. Our findings provide evidence for the role of SPARC in early transformation of melanocytes and identify a novel mechanism, whereby tumor-derived SPARC promotes tumorigenesis by mediating Snail induction and E-cadherin suppression.