We examined the role of cell shape, cytodifferentiation, and tissue topography on the induction and maintenance of functional differentiation in rabbit mammary cells grown as primary cultures on two-dimensional collagen surfaces or in three-dimensional collagen matrices. Mammary glands from mid-pregnant rabbits were dissociated into single cells, and epithelial cells were enriched by isopycnic centrifugation. Small spheroids of epithelial cells (approximately 50 cells) that formed on a rotary shaker were plated on or embedded in collagen gels. The cells were cultured for 1 d in serum-containing medium and then for up to 25 d in chemically defined medium. In some experiments, epithelial monolayers on gels were mechanically freed from the dishes on day 2 or 5. These gels retracted and formed floating collagen gels. On attached collagen gels, flat monolayers of a single cell type developed within a few days. The cells synthesized DNA until the achievement of confluence but did not accumulate milk proteins. No morphological changes were induced by prolactin (PRL). On floating gels, two cell types appeared in the absence of cell proliferation. The cells in direct contact with the medium became cuboidal and developed intracellular organelles typical of secretory cells. PRL-induced lipogenesis, resulting in large fat droplets filling the apical cytoplasm and accumulation of casein and cx-lactalbumin in vesicles surrounding the fat droplets. We detected transferrin in the presence or absence of PRL intracellularly in small vesicles but also in the collagen matrix in contact with the cell layer. The second cell type, rich in microfilaments and reminiscent of the myoepithelial cells, was situated between the secretory cell layer and the collagen matrix. In embedding gels, the cells formed hollow ductlike structures, which grew continuously in size. Secretory cells formed typical lumina distended by secretory products. We found few microfilament-rich cells in contact with the collagen gels. Storage and secretion of fat, caseins and ~x-lactalbumin required the presence of PRL, whereas the accumulation and vectorial discharge of transferrin was prolactin independent. There was no differentiation gradient between the tip and the center of the outgrowth, since DNA synthesis and milk protein storage were random along the tubular structures.These results indicate that establishment of functional polarity and induction of cytodifferentiation are influenced by the nature of the interaction of the cells with the collagen structure. The morphological differentiation in turn plays an important role in the synthesis, storage, and secretion of fat and milk proteins.Onset of gestation is reflected in the mammary gland by the resumption of epithelial cell proliferation with a characteristic lobulo-alveolar outgrowth into fat tissue previously free of ductal penetration. The cell growth of the mammary gland is