The T-cell activation antigen CD26 or dipeptidyl-peptidase IV (DPP-IV) belongs to a group of membrane-bound proteases that are variably expressed by melanoma cell lines. In vitro studies have suggested that loss of CD26 is associated with tumour progression. To correlate its expression with the histological stage of tumour progression of malignant melanoma (MM), we studied the distribution of CD26/DPP-IV in paraffin sections of a series of 110 benign and malignant pigment-cell lesions of the skin using a cocktail of anti-CD26 monoclonal antibodies and the three-step ABC method. Only two of 44 benign lesions focally expressed CD26 in their junctional compartment. In MM, expression of CD26 was not related to any of the known histological prognostic factors, but was associated with the stage of tumour progression; thus, CD26 was expressed in the in situ or invasive radial growth phase in 34% of MM, whereas only 12% of MM expressed CD26 in the vertical growth phase. No CD26 expression occurred in metastatic melanomas. These data suggest that this proteinase plays a part in the early invasion of MM. Thus, CD26 may serve in the binding to, and enzymatic degradation, components of the extracellular matrix of the papillary dermis. Loss of CD26 in the vertical growth phase may contribute to the insufficient inactivation of regulatory peptides and unlimited action of growth factors.