Many investigations of cancer development have pursued the mechanisms by which genetic mutations stimulate tumor development through activation of oncogenes or loss of tumor suppressor genes. However, there is an increasing awareness that signals provided by the stroma can induce the genetic alterations that underlie tumor formation, can stimulate tumor growth and progression, and can dictate both therapeutic response and ultimate clinical outcome. This principle is particularly clear in breast cancer, where recent investigations using sophisticated three-dimensional cell culture models and transgenic animals have been used to define how altered signals from the microenvironment contribute to breakdown of tissue structure, increased cellular proliferation, and transition to the malignant phenotype. We review here recent studies identifying new roles for cancer-associated fibroblasts in promoting tumor progression, through stimulation of inflammatory pathways and induction of extracellular matrix-remodelling proteases. These studies identify mechanisms by which development of a reactive tumor stroma causes mammary hyperproliferation, progression to fibrosis, development of neoplasia, increasing invasiveness, and eventual metastasis, and how intervention in these processes may provide new avenues for therapy.