By characterizing a complex chromosome rearrangement involving 6q and 17p in melanoma cell line UACC-930, we isolated a candidate tumor suppressor gene at 6q21, named prenyl diphosphate synthase subunit 2 (PDSS2), which was interrupted by an inversion breakpoint. The purpose of this study was to determine the tumor-suppressive potential of PDSS2 in the development of melanoma. To isolate the rearranged 6q in UACC-930 cells, a bacterial artificial chromosome clone (RP1-67A8) covering the breakpoint at 6q21 was digested with HindIII and each DNA fragment was used as the probe for the breakpoint in Southern blotting. The HindIII fragment probe covering the breakpoint was then used to screen an EcoRI-digested DNA library generated from UACC-930. To characterize the tumor-suppressive potential of PDSS2, PDSS2 was stably transfected into a highly tumorigenic melanoma cell line, UACC-903. The tumor-suppressive function of PDSS2 was shown by both in vitro and in vivo assays. The differential expression of PDSS2 in benign nevi and primary melanoma samples was also studied. Down-regulation of PDSS2 was observed in 59 of 87 (67.8%) primary melanomas, which was significantly higher than that in benign nevi (7 of 66, 10.6%; P < 0.001). In addition, an overexpression of the PDSS2 in UACC-903 cells could inhibit tumor cell growth, decrease the colony-forming ability in soft agar, and totally abrogate the tumorigenicity of UACC-903 in nude mice. Our results support the proposal that PDSS2 is a novel tumor suppressor gene that plays an important role in the development of malignant melanoma.