Collagen type IV degradation results in disruption and breakdown of the normal basement membrane architecture, a key process in the initiation of tumor microinvasion into the connective tissue. PACE4, a proprotein convertase, activates membrane type matrix metalloproteinases (MT-MMPs) that in turn process collagenase type IV. Because PACE4 is overexpressed in skin carcinomas and in vitro overexpression of PACE4 resulted in enhanced invasiveness, we investigated whether or not in vivo PACE4 expression leads to the acquisition of invasiveness and increased tumorigenesis. Two transgenic mouse lines were designed by targeting PACE4 to the epidermal basal keratinocytes. Transgenic keratinocytes showed increased processing of MT1-MMP and MT2-MMP resulting in collagenase IV activation and collagen type IV degradation. Higher collagenolytic activity partially disrupted normal basement membrane architecture favoring epithelial endophytic growth into the dermis and accelerating invasion and metastasis after chemical carcinogenesis. PACE4 overexpression resulted in enhanced susceptibility to carcinogenesis and tumor progression pointing to a new target for blocking tumor cell invasiveness.