Matrix metalloproteinases (MMPs) are invariably upregulated in the stromal compartment of epithelial cancers and appear to promote invasion and metastasis. Here we report that phenotypically normal mammary epithelial cells with tetracycline-regulated expression of MMP3/stromelysin-1 (Str1) form epithelial glandular structures in vivo without Str1 but form invasive mesenchymal-like tumors with Str1. Once initiated, the tumors become independent of continued Str1 expression. Str1 also promotes spontaneous premalignant changes and malignant conversion in mammary glands of transgenic mice. These changes are blocked by coexpression of a TIMP1 transgene. The premalignant and malignant lesions have stereotyped genomic changes unlike those seen in other murine mammary cancer models. These data indicate that Str1 influences tumor initiation and alters neoplastic risk.