HC11 is a normal mouse mammary epithelial cell line that requires certain growth factors, such as EGF or bFGF, to respond optimally to lactogenic hormones and produce the differentiation marker beta-casein. Growth in insulin (Ins) or PDGF does not produce cells competent to respond to lactogenic hormones. Here we show that competency for differentiation is due at least in part to the modulation of extracellular matrix components. In particular we have studied laminin and tenascin. EGF alters endogenous laminin assembly. In addition, promotion of competency can be partially mimicked by plating HC11 cells on the E8 laminin fragment, which is able to induce lactogenic responsiveness in cells grown in the absence of EGF or bFGF. The production and assembly of tenascin is also dependent upon the growth conditions of the HC11 cells. EGF- or bFGF-grown competent cells produce tenascin but do not assemble it at the extracellular matrix as efficiently as Ins- or PDGF-grown, non-competent cells. This alteration apparently leads to a change in the cellular microenvironment that supports beta-casein production. In addition, when competent cells are plated on dishes coated with tenascin, lactogenic hormone induction of beta-casein is inhibited. The data suggest that tenascin assembly and beta-casein production are opposing features of a coordinated differentiation program of HC11 cells.