Phosphatase of regenerating liver (PRL)-3, a member of a subgroup of protein tyrosine phosphatases that can stimulate the degradation of the extracellular matrix, is over-expressed in metastatic colorectal cancer (CRC) relative to primary tumors. To determine whether PRL-3-induced enhancement of migration and invasion is dependent on the expression of matrix metalloproteinases (MMPs), PRL-3 was expressed in DLD-1 human CRC cells. The motility, migration and invasion characteristics of the cells were examined, and metastasis to the lung was confirmed in a nude mouse using PRL-3-overexpressing DLD-1 cells [DLD-1 (PRL-3)]. Migration and invasion of the cells were inhibited by phosphatase and farnesyltransferase inhibitors. Expression of MMPs was enhanced 3- to 10-fold in comparison to control cells, and migration and invasion were partially inhibited by small interfering RNA (siRNA) knockdown of MMP-2, -13 or -14. Importantly, siRNA knockdown of MMP-7 completely inhibited the migration and invasion of DLD-1 (PRL-3) cells, whereas overexpression of MMP-7 increased migration. The expression of MMP-7 was also downregulated by phosphatase and farnesyltransferase inhibitors. It was found that PRL-3 induced MMP-7 through oncogenic pathways including PI3K/AKT and ERK and that there is a relationship between the expression of PRL-3 and MMP-7 in human tumor cell lines. The expression of MMP-13 and -14 was very sensitive to the inhibition of farnesyltransferase; however, the migration and invasion of DLD-1 (PRL-3) cells did not strongly depend on the expression of MMP-13 or -14. These results suggest that the migration and invasion of PRL-3-expressing CRC cells depends primarily on the expression of MMP-7.