Epithelial-mesenchymal transition (EMT), a phenotypic alteration in which epithelial cells detach from their surroundings and become more migratory, is becoming increasingly acknowledged as playing an important role in pathological conditions including fibrosis, tumor progression, and metastatic invasion. Here, we show that under certain conditions cell shape and matrix compliance are critical in determining whether epithelial cells will undergo EMT. EMT can be induced in cultured mouse mammary epithelial cells by matrix metalloproteinase-3 (MMP-3) resulting in expression of Rac1b, alterations in the cytoskeletal structure, and increased spreading of the cells. We find that increased cellular spreading is a requirement for MMP-3-induced EMT in mammary epithelial cells. Our results provide insight into how biophysical properties of the cellular microenvironment contribute to EMT and may aid in future efforts to identify therapeutic targets for blocking MMP-mediated fibrosis and malignancy in vivo.