Extracellular matrix (ECM) profoundly influences the growth and differentiation of the mammary gland epithelium, both in culture and in vivo. Utilizing a clonal population of mouse mammary epithelial cells that absolutely requires an exogenous ECM for function, we developed a rapid assay to study signal transduction by ECM. Two components of the cellular response to a basement membrane overlay that result in the expression of the milk protein beta-casein were defined. The first component of this response involves a rounding and clustering of the cells that can be physically mimicked by plating the cells on a nonadhesive substratum. The second component is biochemical in nature, and it is associated with beta 1 integrin clustering and increased tyrosine phosphorylation. The second component is initiated in a morphology-independent manner, but the proper translation of this biochemical signal into a functional response requires cell rounding and cell clustering. Thus, physical and biochemical signal transduction events contribute to the ECM-dependent regulation of tissue-specific gene expression in mouse mammary epithelial cells.