We studied the link between loss of E-cadherin-mediated adhesion and acquisition of malignant properties in three-dimensional, human tissue constructs that mimicked the initial stages of squamous cell cancer progression. Suppression of E-cadherin expression in early-stage, skin-derived tumor cells (HaCaT-II-4) was induced by cytoplasmic sequestration of beta-catenin upon stable expression of a dominant-negative E-cadherin fusion protein (H-2Kd-Ecad). In monolayer cultures, expression of H-2Kd-Ecad resulted in decreased levels of E-cadherin, redistribution of beta-catenin to the cytoplasm, and complete loss of intercellular adhesion when compared with control II-4 cells. This was accompanied by a 7-fold decrease in beta-catenin-mediated transcription and a 12-fold increase in cell migration. In three-dimensional constructs, E-cadherin-deficient tissues showed disruption of architecture, loss of adherens junctional proteins from cell contacts, and focal tumor cell invasion. Invasion was linked to activation of matrix metalloproteinase (MMP)-mediated degradation of basement membrane in H-2Kd-Ecad-expressing tissue constructs that was blocked by MMP inhibition (GM6001). Quantitative reverse transcription-PCR showed a 2.5-fold increase in MMP-2 and an 8-fold increase in MMP-9 in cells expressing the H-2Kd-Ecad fusion protein when compared with controls, and gel zymography showed increased MMP protein levels. Following surface transplantation of three-dimensional tissues, suppression of E-cadherin expression greatly accelerated tumorigenesis in vivo by inducing a switch to high-grade carcinomas that resulted in a 5-fold increase in tumor size after 4 weeks. Suppression of E-cadherin expression and loss of its function fundamentally modified squamous cell carcinoma progression by activating a highly invasive, aggressive tumor phenotype, whereas maintenance of E-cadherin prevented invasion in vitro and limited tumor progression in vivo.