Tumor-stroma interactions play a significant role in tumor development and progression. Alterations in the stromal microenvironment, including enhanced vasculature (angiogenesis), modified extracellular matrix composition, inflammatory cells, and dys-balanced protease activity, are essential regulatory factors of tumor growth and invasion. Differential modulation of stromal characteristics is induced by epithelial skin tumor cells depending on their transformation stage when grown as surface transplants in vivo. Tumor cells can regulate the development of a "tumor-stroma" via the aberrant expression of growth factors or induction of growth factor receptors in the stromal compartment. In this context, secretion of the hematopoietic growth factors G-CSF and GM-CSF, constituitively expressed in enhanced malignant tumors, may be good candidates for induction of a tumor stroma through their effect on inflammatory cells. Upon its induction, the tumor stroma will reciprocally influence the differentiation status of tumor cells resulting in a normalization of benign tumor epithelia and the maintenance of a malignant phenotype, respectively. In the HaCaT model for squamous cell carcinoma of the skin, stromal activation and angiogenesis are transient in pre-malignant transplants, however they remain persistent in malignant transplants where progressive angiogenesis is closely correlated with tumor invasion. While continued expression of VEGF and PDGF are associated with benign tumor phenotypes, activation of VEGFR-2 is a hallmark of malignant tumors and accompanies ongoing angiogenesis and tumor invasion. As a consequence the inhibition of ongoing angiogenesis by blocking VEGFR-2 signalling resulted in dramatically impaired malignant tumor expansion and invasion. Comparably, tumor vascularization and invasion was blocked by disturbing the balance of matrix protease activity caused by a lack of PAI-1 in the stromal cells of the knockout mouse hosts. A similar inhibition of tumor vascularization was caused by TSP-1 over-expression in skin carcinoma cells, which also blocked tumor invasion and expansion. On the other hand, when granulation tissue and angiogenesis were only transiently activated as a result of stable transfection of PDGF into non-tumorigenic HaCaT cells, the target cells formed benign, but not malignant, tumors. Collectively, these data show that tumor vascularization, providing intimate association of blood vessels with tumor cells, is a prerequisite for tumor invasion. A potential mechanism for this interrelationship may be the differential regulation of MMP-expression in tumors of different grades of malignancy. In vitro MMP expression did not discriminate between benign and malignant tumor cells unless they were co-cultured with stromal fibroblasts. However, in vivo regulation of MMP expression was clearly dependent on tumor phenotype. While MMP-1 and MMP-13 were down-regulated in benign transplants, they were persistently up-regulated in malignant ones. A tight balance between proteases and their inhibitors is crucial for both the formation and infiltration of blood vessels and for tumor cell invasion, thus again emphasizing the importance of the stromal compartment for the development and progression of carcinomas.