By catalyzing plasmin formation, the urokinase-type plasminogen activator (uPA) can generate widespread extracellular proteolysis and thereby play an important role in physiological and pathological processes. Dysregulated expression of uPA during organogenesis may be a cause of developmental defects. Targeted epithelial expression of a uPA-encoding transgene under the control of the keratin type-5 promoter resulted in enzyme production by the enamel epithelium, which does not normally express uPA, and altered tooth development. The incisors of transgenic mice were fragile, chalky-white and, by scanning electron microscopy, their labial surface appeared granular. This phenotype was attributed to a defect in enamel formation during incisor development, resulting from structural and functional alterations of the ameloblasts that differentiate from the labial enamel epithelium. Immunofluorescence revealed that disorganization of the ameloblast layer was associated with a loss of laminin-5, an extracellular matrix molecule mediating epithelial anchorage. Amelogenin, a key protein in enamel formation, was markedly decreased at the enamel-dentin junction in transgenics, presumably because of an apparent alteration in the polarity of its secretion. In addition, increased levels of active transforming growth factor-beta could be demonstrated in mandibles of transgenic mice. Since the alterations detected could be attributed to uPA catalytic activity, this model provides evidence as to how dysregulated proteolysis, involving uPA or other extracellular proteases, may have developmental consequences such as those leading to enamel defects.