CD24 is a glycosyl-phosphatidylinositol-anchored protein with mucin-type structure that resides exclusively in membrane microdomains. CD24 is often highly expressed in carcinomas and correlates with poor prognosis. Experimentally, the over-expression or depletion of CD24 alters cell proliferation, adhesion, and invasion in vitro and tumor growth in vivo. However, little is known about the mechanisms by which CD24 mediates these cellular effects. Here we have studied the mechanism of CD24-dependent cell invasion using transient CD24 knock-down or over-expression in human cancer cell lines. We show that CD24 depletion reduced tumor cell invasion and up-regulated expression of Tissue Factor Pathway Inhibitor 2 (TFPI-2), a potent inhibitor of extracellular matrix degradation that can block metastases formation and tumor cell invasion. Over-expression of CD24 in A125 cells resulted in reduced TFPI-2 expression and enhanced invasion. We provide evidence that the activity of c-Src is reduced upon CD24 knock-down. The silencing of c-Src, similar to CD24, was able to enhance TFPI-2 expression and reduce tumor cell invasion. An inverse expression of CD24 and TFPI-2 was observed by immunohistochemical analysis of primary breast cancers (N = 1,174). TFPI-2 expression was highest in CD24 negative samples and lowered with increasing CD24 expression. Patients with a CD24 low/TFPI-2 high phenotype showed significantly better survival compared to CD24 high/TFPI-2 low patients. Our results provide evidence that CD24 can regulate cell invasion via TFPI-2 and suggests a role of c-Src in this process.