Perineural invasion (PNI) is an indicator of poor survival in multiple cancers. Unfortunately, there is no targeted treatment for PNI since the molecular mechanisms are largely unknown. PNI is an active process, suggesting that cancer cells communicate with nerves. However, nerve-tumour crosstalk is understudied due to the lack of in vivo models to investigate the mechanisms. Here we developed an in vivo model of PNI to characterize this interaction. We show that the neuropeptide galanin (GAL) initiates nerve-tumour crosstalk via activation of its G protein-coupled receptor, GALR2. Our data reveal a novel mechanism by which GAL from nerves stimulates GALR2 on cancer cells to induce NFATC2-mediated transcription of cyclooxygenase-2 and GAL. Prostaglandin E2 promotes cancer invasion, and in a feedback mechanism, GAL released by cancer induces neuritogenesis, facilitating PNI. This study describes a novel in vivo model for PNI and reveals the dynamic interaction between nerve and cancer.