Lumican, an extracellular matrix (ECM) keratan sulfate proteoglycan, binds fibrillar collagen and limits collagen fibril diameter in the cornea, skin and tendon. Lumican-deficient mice (Lum(-/-)) develop abnormally thick collagen fibrils, translucent corneas and fragilities of the skin and the tendon. In addition to modulating interstitial ECM structure, here we hypothesized that lumican regulates proliferation and apoptosis of cells residing in the interstitium. Corneal and embryonic fibroblasts from the Lum(-/-) mouse show increased growth in culture. Lum(-/-) mouse embryonic fibroblasts (MEF), compared to their wild type counterparts, display increased rates of proliferation and decreased apoptosis. Ectopic expression of lumican in Lum(-/-) MEF or exogenous recombinant lumican in the culture medium reduces proliferation to rates seen in the Lum(+/+) MEF. We further investigated the implications of lumican's proliferation and apoptosis regulatory role in the cornea where lumican is a major component of the stromal matrix. Stromal keratocytes undergo proliferation and apoptosis during corneal maturation and in the healing of injured cornea. The Lum(-/-) mouse shows increased proliferation and decreased apoptosis of stromal keratocytes during postnatal corneal maturation at the 10-day age. Apoptosis is also significantly down regulated in Lum(-/-) vis-à-vis Lum(+/+) mice during stromal wound healing in the adult 6-week age. Lumican appears to regulate these cellular functions by modulating specific cell growth and apoptosis mediators. Thus, Lum(-/-) MEF have decreased p21(WAF1/CIP1), a universal inhibitor of cyclin-dependent kinases and a consequent increase in cyclins A, D1 and E. Furthermore, the tumor suppressor p53, an upstream regulator of p21 is down regulated in the MEF and the cornea of Lum(-/-) mice. The evidence suggests regulation of p21 by lumican in a p53-dependent way. The MEF and the cornea of Lum(-/-) mice also show a dramatic decrease in Fas (CD95). The Lum(-/-) MEF fail to induce Fas upon treatment with Fas ligand. Fas-Fas ligand interaction is an initiating event in apoptosis and its disruption in lumican-deficiency may partly explain the observed decrease in apoptosis. Fas-Fas ligand mediated apoptosis is critical for maintaining the immune privileged status of the cornea, which implies a new and exciting role for lumican in the cornea.