The relationship between loss of intercellular adhesion and the biologic properties of human squamous cell carcinoma is not well understood. We investigated how abrogation of E-cadherin-mediated adhesion influenced the behavior and phenotype of squamous cell carcinoma in 3D human tissues. Cell-cell adhesion was disrupted in early-stage epithelial tumor cells (HaCaT-II-4) through expression of a dominant-negative form of E-cadherin (H-2Kd-Ecad). Three-dimensional human tissue constructs harboring either H-2Kd-Ecad-expressing or control II-4 cells (pBabe, H-2Kd-EcadDeltaC25) were cultured at an air-liquid interface for 8 days and transplanted to nude mice; tumor phenotype was analyzed 2 days and 2 and 4 weeks later. H-2Kd-Ecad-expressing tumors demonstrated a switch to a high-grade aggressive tumor phenotype characterized by poorly differentiated tumor cells that infiltrated throughout the stroma. This high-grade carcinoma revealed elevated cell proliferation in a random pattern, loss of keratin 1 and diffuse deposition of laminin 5 gamma2 chain. When II-4 cell variants were seeded into type I collagen gels as an in vitro assay for cell migration, we found that only E-cadherin-deficient cells detached, migrated as single cells and expressed N-cadherin. Function-blocking studies demonstrated that this migration was matrix metalloproteinase-dependent, as GM-6001 and TIMP-2, but not TIMP-1, could block migration. Gene expression profiles revealed that E-cadherin-deficient II-4 cells demonstrated increased expression of proteases and cell-cell and cell-matrix proteins. These findings showed that loss of E-cadherin-mediated adhesion plays a causal role in the transition from low- to high-grade squamous cell carcinomas and that the absence of E-cadherin is an important prognostic marker in the progression of this disease.