Psoriasin (S100A7) is expressed at low levels in normal breast epithelial cells but is highly expressed in preinvasive ductal carcinoma in situ. Persistent psoriasin expression occurs in some invasive carcinomas and is associated with poor prognostic factors. Whereas there is evidence that secreted psoriasin can act as a chemotactic factor for CD-4-positive lymphocytes in psoriatic skin lesions, an intracellular biological function is unknown. We have found that psoriasin physically interacts with Jab1 (c-jun activation-domain binding protein 1) in the yeast two-hybrid assay and confirmed this by coimmunoprecipitation assay in breast cancer cells. Psoriasin-transfected breast cancer cells showed increased nuclear Jab1 and demonstrated several features consistent with an alteration in Jab1 activity including an increase in activator protein-1 (AP-1) activity, increased expression of AP-1 and HIF-1-dependent genes, and reduced expression of the cell-cycle inhibitor p27(Kip1). Psoriasin overexpression was also associated with alteration of cellular functions that are associated with increased malignancy, including increased growth, decreased adhesion, and increased invasiveness in vitro, as well as increased tumorigenicity in vivo in nude mice. We conclude that intracellular psoriasin influences breast cancer progression and that this may occur through stimulation of Jab1 activity.