Cell density regulates many aspects of cell properties and behaviors including metabolism, growth, cytoskeletal structure and locomotion. Importantly, the responses by cultured cells to density signals also uncover key mechanisms that govern animal development and diseases in vivo. Here we characterized a density-responsive reporter system in transgenic Drosophila S2 cells. We show that the reporter genes are strongly induced in a cell density-dependent and reporter-independent fashion. The rapid and reversible induction occurs at the level of mRNA accumulation. We show that multiple DNA elements within the transgene sequences, including a metal response element from the metallothionein gene, contribute to the reporter induction. The reporter induction correlates with changes in multiple cell density and growth regulatory pathways including hypoxia, apoptosis, cell cycle and cytoskeletal organization. Potential applications of such a density-responsive reporter will be discussed.