It has previously been shown that mammary stromal cells possess the ability to maintain a fibroblast-like phenotype or differentiate in vitro into mature adipocytes in a hormone-dependent manner. This paper reports that rat mammary stromal cells can also differentiate into capillary-like structures in vitro when cultured on a reconstituted basement membrane (RBM). The differentiation potential of mammary stromal cells was compared with that of human umbilical vein endothelial cells (HUVEC) and 3T3-L1 preadipocytes. When cultured on plastic, mammary stromal cells, 3T3-L1 and HUVEC maintained a fibroblast-like phenotype. Mammary stromal cells and 3T3-L1, but not HUVEC, differentiated into mature adipocytes when cultured in adipogenic medium. When plated on reconstituted basement membrane, all three cell types began to migrate and organize themselves into an interconnected capillary network. By 18-20 h, mammary stromal cells organized into complex, highly branched capillary-like tubules whereas 3T3-L1 cells and HUVEC formed more simple structures. Cross-sectional analysis demonstrated the presence of an internal lumen. Mammary stromal cells were unique in their ability to progressively develop into a three-dimensional, highly branched network invading the RBM surface. The network formation was enhanced by the presence of vascular endothelial growth factor (VEGF) and was inhibited by the anti-angiogenic drug suramin. Western blotting analysis demonstrated the presence of the endothelial-specific marker flk-1, as well as the presence of the tight-junction-associated protein ZO-1. Mammary stromal cell differentiation into capillary structures was not a terminal state, since these cells were still able to differentiate into adipocytes when exposed to adipogenic medium. These findings suggest that mammary stromal cells differentiate into fibroblasts, adipocytes or vascular structures in a hormone- and substatum-dependent manner, and may explain the dramatic changes in stromal composition during both normal mammary gland development and tumorigenesis.