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Hepsin, a cell surface protease, is widely reported to be overexpressed in more than 90% of human prostate tumors. Hepsin expression correlates with tumor progression, making it a significant marker and target for prostate cancer. Recently, it was reported that in a prostate cancer mouse model, hepsin up-regulation in tumor tissue promotes progression and metastasis. The underlying mechanisms, however, remain largely uncharacterized. Hepsin transgenic mice displayed reduced laminin-332 (Ln-332) expression in prostate tumors. This is an intriguing cue, since proteolytic processing of extracellular matrix macromolecules, such as Ln-332, is believed to be involved in cancer progression, and Ln-332 expression is lost during human prostate cancer progression. In this study, we provide the first direct evidence that hepsin cleaves Ln-332. Cleavage is specific, since it is both inhibited in a dose-dependent manner by a hepsin inhibitor (Kunitz domain-1) and does not occur when catalytically inactive hepsin is used. By Western blotting and mass spectrometry, we determined that hepsin cleaves the beta3 chain of Ln-332. N-terminal sequencing identified the cleavage site at beta3 Arg(245), in a sequence context (SQLR(245) LQGSCFC) conserved among species and in remarkable agreement with reported consensus target sequences for hepsin activity. In vitro cell migration assays showed that hepsin-cleaved Ln-332 enhanced motility of DU145 prostate cancer cells, which was inhibited by Kunitz domain-1. Further, hepsin-overexpressing LNCaP prostate cancer cells also exhibited increased migration on Ln-332. Direct cleavage of Ln-332 may be one mechanism by which hepsin promotes prostate tumor progression and metastasis, possibly by up-regulating prostate cancer cell motility.