E1A genes deficient in the carboxy-terminal exon can cooperate with activated ras oncogenes to induce transformation of rat embryo fibroblasts. However, the resulting transformed foci show a distinct appearance characterized by a decreased adhesion of the cells to the substrate. Here, we demonstrate that cell lines derived from foci showing the variant morphology are defective in down-regulation of stromelysin 1 metalloprotease expression and show an increased invasive propensity compared with cells transformed by wild-type E1A. The altered focus morphology, the high invasive propensity and the elevated stromelysin 1 expression were abrogated by glucocorticoid treatment. Our results show that E1A functions necessary for transformation and inhibition of invasive properties may be separated, and indicate that a 23 amino acid serine/threonine-rich region within the E1A carboxy-terminal exon is required for efficient repression of metalloprotease expression in transformed cells.