Development of malignant tumours is in part characterized by the ability of a tumour cell to overcome cell-cell adhesion and to invade surrounding tissue. E-cadherin is the main adhesion molecule of epithelia(1-3), and it has been implicated in carcinogenesis because it is frequently lost in human epithelial cancers(4-6). Re-establishing the functional cadherin complex in tumour cell lines results in a reversion from an invasive to a benign epithelial phenotype(7), However, it remained unresolved whether the loss of E-cadherin-mediated cell adhesion was a cause or a consequence of tumour progression in vivo, Here we report that the loss of E-cadherin expression coincides with the transition from well differentiated adenoma to invasive carcinoma in a transgenic mouse model of pancreatic beta-cell carcinogenesis (Rip1Tag2)(8). Intercrossing Rip1Tag2 mice with transgenic mice that maintain E-cadherin expression in beta-tumour cells results in arrest of tumour development at the adenoma stage, whereas expression of a dominant-negative form of E-cadherin induces early invasion and metastasis. The results demonstrate that loss of E-cadherin-mediated cell adhesion is one rate-limiting step in the progression from adenoma to carcinoma.