The gastric pathogen Helicobacter pylori is linked to peptic ulcer and gastric cancer but the relevant pathophysiological mechanisms are unclear. We now report that H.pylori stimulates the expression of plasminogen activator inhibitor (PAI)-1, urokinase plasminogen activator (uPA) and its receptor (uPAR) in gastric epithelial cells and the consequences for epithelial cell proliferation. Real time PCR of biopsies from gastric corpus, but not antrum, showed significantly increased PAI-1, uPA and uPAR in H.pylori positive patients. Transfection of primary human gastric epithelial cells with uPA, PAI-1 or uPAR promoters in luciferase reporter constructs, revealed expression of all three in H+/K+ATPase- and VMAT-2-expressing cells; uPA was also expressed in pepsinogen-containing and uPAR in TFF-1-expressing cells. In each case expression was increased in response to H. pylori, and for uPA, but not PAI-1 or uPAR, required the virulence factor CagE. H.pylori also stimulated soluble and cell surface bound uPA activity and both were further increased by PAI-1 knockdown consistent with PAI-1 inhibition of endogenous uPA. H.pylori stimulated epithelial cell proliferation which was inhibited by uPA immunoneutralisation and uPAR knockdown; exogenous uPA also stimulated proliferation that was further increased after PAI-1 knockdown. The proliferative effects of uPA were inhibited by immunoneutralisation of the EGF receptor and of heparin-binding epidermal growth factor (HB-EGF), by the mutant diphtheria toxin CRM197, and an EGF receptor tyrosine kinase inhibitor. H.pylori induction of uPA therefore leads to epithelial proliferation through activation of HB-EGF and is normally inhibited by concomitant induction of PAI-1; treatments directed at inhibition of uPA may slow the progression to gastric cancer.