Although growth factors and extracellular matrix (ECM) are recognized as important contributors to breast epithelial growth, morphogenesis, hormone responsiveness, and neoplastic progression, the influence of functional interactions between breast stromal and epithelial cells on these processes has not been defined. Using a novel three-dimensional cell-cell interaction model, we have compared the abilities of different mesenchymal cell types, including breast fibroblasts derived from reduction mammoplasty and tumor tissues, and human umbilical endothelial cells (HUVECs) to induce three-dimensional morphogenesis and growth of normal MCF10A and preneoplastic MCF10AT1-EIII8 (referred as EIII8) human breast epithelial cells. Our data demonstrate a requirement for organspecific fibroblasts in the induction of epithelial morphogenesis. Whereas inclusion of normal reduction mammoplasty fibroblasts inhibit or retard morphological conversion and growth of MCF10A and EIII8 cells, respectively, tumor-derived breast fibroblasts evoke ductal-alveolar morphogenesis of both MCF10A and EIII8 cells. The growth and morphogenesis inhibitory effects of normal fibroblasts remain even in the presence of estrogen because they are able to suppress the estrogen-induced growth of EIII8 cells, whereas tumor fibroblasts support and maintain estrogen responsiveness of EIII8 cells. The inductive morphogenic effects of tumor fibroblasts on EIII8 cells is further augmented by the inclusion of HUVECs because these cocultures undergo a dramatic increase in proliferation and branching ductal-alveolar morphogenesis that is accompanied by an increase in invasion, degradation of coincident ECM, and expression of MMP-9. Therefore, tumor fibroblasts confer morphogenic and mitogenic induction of epithelial cells, and further enhancement of growth and progression requires active angiogenesis. These data illustrate the importance of structural and functional interactions between breast stromal and epithelial cells in the regulation of breast epithelial growth and progression.