Signal peptide-CUB-EGF-like domain-containing protein 3 (SCUBE3) is a secreted glycoprotein that is overexpressed in lung cancer tumor tissues and is correlated with the invasive ability in a lung cancer cell line model. These observations suggest that SCUBE3 may have a role in lung cancer progression. By exogenous SCUBE3 treatment or knockdown of SCUBE3 expression, we found that SCUBE3 could promote lung cancer cell mobility and invasiveness. Knockdown of SCUBE3 expression also suppressed tumorigenesis and cancer metastasis in vivo. The secreted SCUBE3 proteins were cleaved by gelatinases (matrix metalloprotease-2 (MMP-2) and MMP-9) in media to release two major fragments: the N-terminal epidermal growth factor-like repeats and the C-terminal complement proteins C1r/C1s, Uegf and Bmp1 (CUB) domain. Both the purified SCUBE3 protein and the C-terminal CUB domain fragment, bound to transforming growth factor-b (TGF-b) type II receptor through the C-terminal CUB domain, activated TGF-b signaling and triggered the epithelial-mesenchymal transition (EMT). This process includes the induction of Smad2/3 phosphorylation, the increase of Smad2/3 transcriptional activity and the upregulation of the expression of target genes involved in EMT and cancer progression (such as TGF-b1, MMP-2, MMP-9, plasminogen activator inhibitor type-1, vascular endothelial growth factor, Snail and Slug), thus promoting cancer cell mobility and invasion. In conclusion, in lung cancer cells, SCUBE3 could serve as an endogenous autocrine and paracrine ligand of TGF-b type II receptor, which could regulate TGF-b receptor signaling and modulate EMT and cancer progression.