Transforming growth factor-β (TGF-β) has opposing roles in breast cancer progression by acting as a tumor suppressor in the initial phase, but stimulating invasion and metastasis at later stages. In contrast to the mechanisms by which TGF-β induces growth arrest, the pathways that mediate tumor invasion are not well understood. Here, we describe a TGF-β-dependent invasion assay system consisting of spheroids of MCF10A1 normal breast epithelial cells (M1) and RAS-transformed (pre-)malignant derivatives (M2 and M4) embedded in collagen gels. Both basal and TGF-β-induced invasion of these cell lines was found to correlate with their tumorigenic potential; M4 showing the most aggressive behavior and M1 showing the least. Basal invasion was strongly inhibited by the TGF-β receptor kinase inhibitor SB-431542, indicating the involvement of autocrine TGF-β or TGF-β-like activity. TGF-β-induced invasion in premalignant M2 and highly malignant M4 cells was also inhibited upon specific knockdown of Smad3 or Smad4. Interestingly, both a broad spectrum matrix metalloproteinase (MMP) inhibitor and a selective MMP2 and MMP9 inhibitor mitigated TGF-β-induced invasion of M4 cells, while leaving basal invasion intact. In line with this, TGF-β was found to strongly induce MMP2 and MMP9 expression in a Smad3- and Smad4-dependent manner. This collagen-embedded spheroid system therefore offers a valuable screening model for TGF-β/Smad- and MMP2- and MMP9-dependent breast cancer invasion.