Cadherins play a crucial role in epithelial morphogenesis and mediate intercellular adhesion. These receptors bind catenins and are involved in signal transduction pathways that regulate cell growth and apoptosis, and are frequently down-regulated in invasive and metastatic carcinomas. In order to assess the role of E-cadherin in cell adhesion and growth, we transfected MCF-7 cells, a human breast cancer cell line, with a dominant-negative construct of E-cadherin (H-2kd-E-cad). The dominant-negative form of E-cadherin disrupted cell-cell adhesion of monolayer cells and induced an epithelial-to-fibroblastic conversion without any significant change in integrin profiles. Whereas control cells rapidly formed multicellular aggregates that tightly compacted into spheroids, dominant-negative transfected cells failed to compact and remained as loosely-associated cells. The transfectants exhibited down-regulation and redistribution of endogenous E-cadherin as well as increased levels of alpha- and beta-catenin. Importantly, the H-2kd-E-cad-transfected cells, when grown as multicellular aggregates, showed an increase in cell proliferation rate, compared to control cells. Overall, these observations suggest that in breast carcinoma, disruption of E-cadherin and catenin function modulates both cell-cell adhesion and permits escape from cell-cell contact-involved inhibition of cell growth.