The degradation of subendothelial and smooth muscle matrices by normal and neoplastic uroepithelial cells grown under serum-free conditions was examined. Normal urothelial cells were compared with neoplastic cells derived from a low grade papillary tumor (RT4) and a more invasive carcinoma (EJ). Low levels of degradation were observed with all cell types in serum-free medium alone. Supplementing the medium with plasminogen increased the degradative activity of each cell type. Logarithmically growing normal urothelial cells degraded extracellular matrix proteins 6 to 14 times faster on a per cell basis than their transformed counterparts. Analysis of the residual matrix constituents revealed that, while the levels of glycoprotein breakdown by the normal and neoplastic cells were similar, the normal cells degraded more of the collagen components than the neoplastic cells. Epidermal growth factor and cell density were examined as possible regulators of degradative activity. The neoplastic cells were not responsive to cell density as a regulatory factor and were only slightly responsive to epidermal growth factor. However, epidermal growth factor increased the degradative activity of logarithmically growing normal urothelial cells in the presence of plasminogen and the activity of confluent cells was increased to an even greater extent. Gelatin substrate gel analysis confirmed that the normal urothelial cells elaborated a more diverse set of gelatinases than the tumorigenic cells. Although normal urothelial cells had higher degradative abilities than their malignant counterparts, it is significant that the neoplastic cells were less responsive to regulatory signals in our model system. Thus, loss of regulatory mechanisms for protease secretion and matrix degradation may be a more important determinant of invasive ability in vivo than protease secretion or matrix degradation in vitro.