Bone morphogenetic proteins (BMPs) are multifunctional cytokines that regulate key developmental processes, but are also overexpressed in many carcinomas. To assess whether BMPs would influence the three-dimensional architecture of epithelial structures, we took advantage of an in vitro model in which mammary epithelial cells form alveolar-like spherical cysts in collagen gels. We found that BMP-4 has a dramatic, biphasic effect on the organization of epithelial cysts. When added in the concentration range of 1-10 ng/ml, the cytokine abrogates lumen formation and induces the outgrowth of multiple invasive cord-like structures. At higher concentrations (20-100 ng/ml), BMP-4 additionally disrupts cell-cell adhesion, resulting in cyst disintegration and scattering of individual cells into the surrounding collagen matrix. The finding that BMP-4 subverts the ability of mammary epithelial cells to form polarized lumen-containing structures and endows them with invasive properties supports the involvement of this cytokine in the progression of breast cancer.