We report the expression of tissue factor pathway inhibitor-2 (TFPI-2) (also known as PP-5, placental protein-5; MSPI, matrix-associated serine protease inhibitor) in E. coli as a 25-kDa nonglycosylated protein with a glycine substituted for aspartic acid at the amino terminus. High-level expression of TFPI-2 was obtained with pRE1 expression vector under the transcriptional and translational controls of the lambda P-L promoter and lambda c(II) ribosome-binding site, respectively, with ATG initiation codon. TFPI-2 was produced as inclusion bodies and accounted for 25-30% of the total E. coli proteins. The inclusion bodies containing TFPI-2 were solubilized with urea, sufitolyzed, purified, and refolded through a disulfide interchange reaction. The refolded E. coli TFPI-2 inhibited plasmin with an inhibition constant (K-i) of 5 nM that is similar with the TFPI-2 expressed in a mammalian system. The refolded E. coli TFPI-2 bound heparin and also inhibited plasmin, regardless of whether the enzyme was in the fluid phase or was bound to the membranes of HT-1080 fibrosarcoma cells. In addition, refolded E. coli TFPI-2 inhibited radiolabeled matrix degradation and Matrigel matrix invasion by HT-1080 fibrosarcoma cells and B16-F10 melanoma cells. Together, our results suggest that glycosylation is not essential for antiprotease, antitumor, and matrix-binding activities of TFPI-2, Based on these collective data, we conclude that a biologically active nonglycosylated TFPI-2 can be produced in E. coli and that the protein can be produced in high-enough quantities to conduct in vivo studies for determination of the role of this inhibitor in tumor invasion and metastasis.