The stromal compartment surrounding epithelial-derived pancreatic tumors is thought to have a key role in the aggressive phenotype of this malignancy. Emerging evidence suggests that cancer-associated fibroblasts (CAFs), the most abundant cells in the stroma of pancreatic tumors, contribute to the tumor's invasion, metastasis and resistance to therapy, but the precise molecular mechanisms that regulate CAFs behavior are poorly understood. In this study, we utilized immortalized human pancreatic CAFs to investigate molecular pathways that control the matrix-remodeling and invasion-promoting activity of CAFs. We showed previously that palladin, an actin-associated protein, is expressed at high levels in CAFs of pancreatic tumors and other solid tumors, and also in an immortalized line of human CAFs. In this study, we found that short-term exposure of CAFs to phorbol esters reduced the number of stress fibers and triggered the appearance of individual invadopodia and invadopodial rosettes in CAFs. Molecular analysis of invadopodia revealed that their composition resembled that of similar structures (that is, invadopodia and podosomes) described in other cell types. Pharmacological inhibition and small interfering RNA knockdown experiments demonstrated that protein kinase C, the small GTPase Cdc42 and palladin were necessary for the efficient assembly of invadopodia by CAFs. In addition, GTPase activity assays showed that palladin contributes to the activation of Cdc42. In mouse xenograft experiments using a mixture of CAFs and tumor cells, palladin expression in CAFs promoted the rapid growth and metastasis of human pancreatic tumor cells. Overall, these results indicate that high levels of palladin expression in CAFs enhance their ability to remodel the extracellular matrix by regulating the activity of Cdc42, which in turn promotes the assembly of matrix-degrading invadopodia in CAFs and tumor cell invasion. Together, these results identify a novel molecular signaling pathway that may provide new molecular targets for the inhibition of pancreatic cancer metastasis.