Cells can sense, signal, and organize via mechanical forces. The ability of cells to mechanically sense and respond to the presence of other cells over relatively long distances (e.g., ∼100 μm, or ∼10 cell-diameters) across extracellular matrix (ECM) has been attributed to the strain-hardening behavior of the ECM. In this study, we explore an alternative hypothesis: the fibrous nature of the ECM makes long-range stress transmission possible and provides an important mechanism for long-range cell-cell mechanical signaling. To test this hypothesis, confocal reflectance microscopy was used to develop image-based finite-element models of stress transmission within fibroblast-seeded collagen gels. Models that account for the gel's fibrous nature were compared with homogenous linear-elastic and strain-hardening models to investigate the mechanisms of stress propagation. Experimentally, cells were observed to compact the collagen gel and align collagen fibers between neighboring cells within 24 h. Finite-element analysis revealed that stresses generated by a centripetally contracting cell boundary are concentrated in the relatively stiff ECM fibers and are propagated farther in a fibrous matrix as compared to homogeneous linear elastic or strain-hardening materials. These results support the hypothesis that ECM fibers, especially aligned ones, play an important role in long-range stress transmission.