Nasopharyngeal carcinoma (NPC) is prevalent in south-eastern Asia, and its tumourigenesis is rather complex. The purpose of this research was to identify the pivotal genes that may be altered during the early stage of NPC progression. Eleven genes were selected by comparative microarray analysis of NPC versus normal nasomucosal cells. The expression of SPARC (secreted protein, acidic, cysteine-rich) was statistically significantly down-regulated in NPC cells. In exploring the mechanism underlying the decreased transcription of SPARC in NPC cells, we found that the transcription factor SRY (sex-determining region Y)-box 5 (SOX-5) is up-regulated in NPC cells. RNA interference of SOX-5 by short hairpin RNA (shRNA) in NPC cells caused a dramatic increase in SPARC and chromosome immunoprecipitation assay showed that SOX-5 can bind directly to the SPARC promoter, suggesting that SOX-5 acts as a key transcriptional repressor of SPARC. We further demonstrated that shRNA knockdown of SOX-5 suppressed the proliferation of NPC cells, as well as their migratory ability, which was also observed when SPARC was over-expressed in NPC cells. Alternatively, blocking SPARC with an antagonistic antibody reversed the effects of SOX-5 knockdown. In 66 NPC patients, over-expression of SOX-5 in tumour cells correlated clinically with poor survival. Our study suggests that SOX-5 transcriptionally down-regulates SPARC expression and plays an important role in the regulation of NPC progression. SOX-5 is a potential tumour marker for poor NPC prognosis. Copyright © 2007 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.