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CD10 is a neutral endopeptidase, which cleaves various peptide substrates including substance P. CD10 expression has been detected in peritumoral fibroblasts (Fb) within the invasive area of various cancers such as squamous cell carcinoma (SCC). However, the biological significance of CD10-bearing Fb remains largely unknown. We examined dynamic interactions of Fb with tumorigenic A431 SCC cells or non-tumorigenic HaCaT squamous cells. The SCC and HaCaT cells did not synthesize CD10, while Fb constitutively expressed CD10. When co-cultured, SCC markedly upregulated fibroblastic CD10 expression compared with HaCaT, which was mainly attributable to SCC-derived interleukin-1α (IL-1α). Both SCC and Fb autonomously secreted substance P, which eventually enhanced the invasive capacity of SCC in a matrigel invasion assay by upregulating matrix metalloproteinase (MMP)-1 and MMP-2, but not MMP-9. Transfection of siRNA for CD10 successfully knocked down the CD10 expression in Fb (CD10ND-Fb). In the presence of CD10ND-Fb, substance P levels in supernatants as well as MMP production and the invasive potency of SCC were significantly augmented compared with control scramble RNA-transfected Fb. We also transfected CD10 vector to Fb and found that the matrigel invasive ability of SCC cells was downregulated co-cultured with CD10 vector-transfected Fb rather than empty vector-transfected Fb. In conclusion, the CD10-bearing Fb generated by SCC-derived IL-1 inhibited the invasive capacity of SCC by diminishing the microenvironmental concentration of substance P. (Cancer Sci 2010; 101: 2570–2578)