Pleiotrophin (PTN, Ptn) is an 18 kD cytokine that is expressed in many human breast cancers and its gene is inappropriately expressed in cell lines derived from these breast cancers. To study the siginificance of inappropriate expression of Ptn in human breast cancer cells on surrounding stromal cells, we first compared nude mouse xenografts of MCF-7 and MCF-7-Ptn cells. MCF-7-Ptn cells lack the Receptor Protein Tyrosine Phosphatase (RPTP)b/z, the PTN receptor, and thus are not responsive to PTN through autocrine or paracrine stimulation. The MCF-7-Ptn cell xenografts grew rapidly whereas MCF-7 cells xenografts were barely detectable 6 weeks after injection. MCF-7-Ptn cells that were co-injected with equal numbers of NIH3T3 cells grew even more rapidly in the flanks of the nude mice. Surprisingly, the MCF-7-Ptn cell explants developed a morphological phenotype remarkably similar to that of the human invasive ductal carcinoma. We then co-cultured MCF-7 cells that express Ptn (MCF-7-Ptn cells) with NIH 3T3 cells. Secretion of PTN from MCF-7-Ptn cells induced formation of sharply defined clusters of MCF-7-Ptn cells, termed “epithelial islands”, that were surrounded by dense fibrous bands interspersed with NIH 3T3 cells that morphologically closely resemble carcinoma associated fibroblasts (CAFs). A striking increase in tropoelastin and expression of type IV procollagen mRNA was identified in NIH3T3 cells co-cultured with MCF-7-Ptn cells. Furthermore, different markers often resulting from stromal cell-carcinoma cell interactions in breast cancer, including protein kinase C (PKC)-d, and both human and murine matrix metalloproteinase (MMP) 9 were identified either in cells or in the culture media taken from MCF-7-Ptn/NIH3T3 cell co-cultures. The induction of these biochemical and morphological features in the co-cultures of MCF-7-Ptn and NIH3T3 cells was demonstrated to be Ptn expression dependent, PTN-secretion dependent, and NIH3T3 cell dependent. The data suggest that PTN secretion alone from human breast cancer cells with inappropriate expression of Ptn is sufficient to markedly remodel the microenvironment of the breast cancer cell and induce a morphological transition of the MCF-7-Ptn cells and NIH3T3 cells to patterns resembling breast carcinomas through activation of the PTN/RPTPb/z signaling pathway in NIH3T3 cells and reciprocal signaling between the carcinoma stromal cells and the PTN secreting breast cancer cells.