Mammary stroma is essential for epithelial morphogenesis and development. Indeed, postnatal mammary gland (MG) development is controlled locally by the repetitive and bi-directional cross-talk between the epithelial and the stromal compartment. However, the signalling pathways involved in stromal-epithelial communication are not entirely understood. Here, we identify Sfrp3 as a mediator of the stromal-epithelial communication that is required for normal mouse MG development. Using Drosophila wing imaginal disc, we demonstrate that Sfrp3 functions as an extracellular transporter of Wnts that facilitates their diffusion, and thus, their levels in the boundaries of different compartments. Indeed, loss of Sfrp3 in mice leads to an increase of ductal invasion and branching mirroring an early pregnancy state. Finally, we observe that loss of Sfrp3 predisposes for invasive breast cancer. Altogether, our study shows that Sfrp3 controls MG morphogenesis by modulating the stromal-epithelial cross-talk during pubertal development.