A coculture system was developed to investigate the interactions between MCF-10A breast epithelial cells and MCF-7 breast cancer cells stably expressing the green fluorescent protein (MCF-7-GFP). Studies with this MCF-10A/MCF-7-GFP coculture system on microtiter plates and on reconstituted basement membrane (Matrigel), revealed paracrine inhibition of MCF-7-GFP cell proliferation. Epidermal growth factor, which in monocultures modestly enhanced MCF-7-GFP and markedly increased MCF-10A cell proliferation, greatly inhibited MCF-7-GFP cell proliferation in MCF-10A/MCF-7-GFP cocultures. 17β-Estradiol, which stimulated MCF-7-GFP but not MCF-10A cell proliferation in monoculture, inhibited MCF-7-GFP cell proliferation in MCF-10A/MCF-7-GFP cocultures, an effect that was blocked by the antiestrogen, ICI 182,780. On Matrigel, complex MCF-10A/MCF-7-GFP cellular interactions were observed in real time that resulted in the formation of acinus-like structures. These results indicate a role of normal epithelial cells in inhibiting tumor-cell proliferation and demonstrate the utility of this coculture system as a model of early paracrine control of breast cancer.