The normal human breast comprises an inner layer of luminal epithelial cells and an outer layer of myoepithelial cells separated from the connective tissue stroma by an intact basement membrane. In breast cancer, tumor cells are in direct contact with the surrounding highly activated collagenous stroma, with little or no discernible myoepithelial fence from the original double-layered structure. To understand the evolution of these two scenarios, we took advantage of a three-dimensional hydrated collagen gel approach. The contribution of myoepithelial cells to normal morphogenesis was studied by ablation and rescue experiments, and genes regulated on tumor cell-fibroblast interaction were identified in a tumor environment assay. In normal breast morphogenesis, the ability to correctly polarize sialomucin to the luminal membrane of emerging acini was used as a criterion for apical polarity and functional differentiation. In the assay of breast neoplasia, the consequence of reciprocal tumor cell-fibroblast interaction was addressed morphologically as well as by a differential display approach. Normal breast epithelial cells were purified immunomagnetically and an established cell line, MCF-7, was used as a surrogate tumor cell. With regard to the importance of myoepithelial cells in normal breast epithelial morphogenesis, the collagen gel assay elucidated the following subtleties: In contrast to culturing in basement membrane gels, luminal epithelial cells when cultured alone made structures that were all inversely polarized. This aberrant polarity could be rescued by co-culture with myoepithelial cells. The molecular activity of myoepithelial cells responsible for correct morphogenesis was narrowed down to the laminin-1 component of the basement membrane. As for the consequence of interaction of tumor cells with connective tissue fibroblasts, the assay allowed us to identify a hitherto undescribed gene referred to as EPSTI1. The relevance of the assay-based identification of regulated genes was confirmed in a series of breast carcinomas in which EPSTI1 was highly upregulated compared with normal breast. Few if any of these observations would have been possible on two-dimensional tissue culture plastic.