In culture, cell confluence generates signals that commit actively growing keratinocytes to exit the cell cycle and differentiate to form a stratified epithelium. Using a comparative proteomic approach, we studied this ‘confluence switch’ and identified a new pathway triggered by cell confluence that regulates basement membrane (BM) protein composition by suppressing the uPA/uPAR/plasmin pathway. Indeed, confluence triggers adherens junction maturation and enhances TGF-β/activin A activity, resulting in increased deposition of PAI-1 and perlecan in the BM. Extracellular matrix (ECM)-accumulated PAI-1 suppresses uPA/uPAR/plasmin pathway and further enhances perlecan deposition by inhibiting its plasmin-dependent proteolysis. We show that perlecan deposition in the ECM strengthens cell adhesion, inhibits keratinocyte motility and promotes additional accumulation of PAI-1 in the ECM at confluence. In agreement, during wound-healing, perlecan concentrates at the wound-margin, where BM matures to stabilize keratinocyte adhesion. Our results demonstrate that confluence dependent-signaling orchestrates not only growth-inhibition and differentiation but also controls ECM-proteolysis and BM formation. These data suggest that uncontrolled integration of confluence-dependent signaling, may favor skin disorders, including tumorigenesis, not only by promoting cell hyperproliferation but also by altering protease activity and deposition of ECM components.