The mammary gland consists of a polarized epithelium surrounded by a basement membrane matrix that forms a series of branching ducts ending in hollow, sphere-like acini. Essential roles for the epithelial basement membrane during acinar differentiation, in particular laminin and its integrin receptors, have been identified using mammary epithelial cells cultured on a reconstituted basement membrane. Contributions from fibronectin, which is abundant in the mammary gland during development and tumorigenesis, have not been fully examined. Here, we show that fibronectin expression by mammary epithelial cells is dynamically regulated during the morphogenic process. Experiments with synthetic polyacrylamide gel substrates implicate both specific extracellular matrix components, including fibronectin itself, and matrix rigidity in this regulation. Alterations in fibronectin levels perturbed acinar organization. During acinar development, increased fibronectin levels resulted in overproliferation of mammary epithelial cells and increased acinar size. Addition of fibronectin to differentiated acini stimulated proliferation and reversed growth arrest of mammary epithelial cells negatively affecting maintenance of proper acinar morphology. These results show that expression of fibronectin creates a permissive environment for cell growth that antagonizes the differentiation signals from the basement membrane. These effects suggest a link between fibronectin expression and epithelial cell growth during development and oncogenesis in the mammary gland.