Prolactin (PRL) promotes the proliferation and survival of breast cancer cells in part via the transactivation of human epidermal growth factor receptor 2 (HER2), also known as Neu in rodents. A PRL receptor (PRLR) antagonist, G129R, has been developed, which indirectly inhibits the tyrosine phosphorylation of HER2 (p-HER2) in human breast cancer cell lines. In this study, we investigate the effects of cancer-associated fibroblasts (CAFs) upon this molecular cross-talk using tumor cells and CAFs derived from spontaneous mammary tumors of female MMTV-neu transgenic mice. Tumors were resected and cultured as small tumor chunks (~3 mm3) or were cultured in monolayer. G129R reduced tyrosine phosphorylation of Neu (p-Neu) in a dose-dependent manner (IC50~10 μg/ml) in tumor chunks, but had no effect on primary tumor epithelial cells grown in monolayer. Direct co-culture of mouse or human tumor epithelial cell lines with CAFs restored the epithelial cells' response to G129R, similar to that observed in mouse tumor chunks. The addition of PRL, as expected, induced p-Neu in both the tumor chunk and co-culture models. The inhibitory effect of G129R was absent when CAFs were physically separated from mouse tumor epithelial cells using a transwell system, or when CAFs were replaced with normal fibroblasts in direct co-culture with human or mouse tumor epithelial cells. In vivo, G129R reduced p-Neu levels in primary mammary tumors of mice in a time- and dose-dependent manner. In conclusion, CAFs play a critical role in bridging the cross-talk between PRL and HER2/Neu in both mouse and human models of breast cancer. The inhibitory effects of G129R on p-Neu and on tumor growth are dependent upon interactions of tumor epithelial cells with CAFs.