Recently, we reported that human breast cancer-associated fibroblasts show functional inactivation of the retinoblastoma (RB) tumor suppressor and down-regulation of caveolin-1 (Cav-1) protein expression. However, it remains unknown whether loss of Cav-1 is sufficient to confer functional RB inactivation in mammary fibroblasts. To establish a direct cause-and-effect relationship, mammary stromal fibroblasts (MSFs) were prepared from Cav-1(-/-) null mice and subjected to phenotypic analysis. Here, we provide evidence that Cav-1(-/-) MSFs share many characteristics with human cancer-associated fibroblasts. The Cav-1(-/-) MSF transcriptome significantly overlaps with human cancer-associated fibroblasts; both show a nearly identical profile of RB/E2F-regulated genes that are up-regulated, which is consistent with RB inactivation. This Cav-1(-/-) MSF gene signature is predictive of poor clinical outcome in breast cancer patients treated with tamoxifen. Consistent with these findings, Cav-1(-/-) MSFs show RB hyperphosphorylation and the up-regulation of estrogen receptor co-activator genes. We also evaluated the paracrine effects of "conditioned media" prepared from Cav-1(-/-) MSFs on wild-type mammary epithelia. Our results indicate that Cav-1(-/-) MSF "conditioned media" is sufficient to induce an epithelial-mesenchymal transition, indicative of an invasive phenotype. Proteomic analysis of this "conditioned media" reveals increased levels of proliferative/angiogenic growth factors. Consistent with these findings, Cav-1(-/-) MSFs are able to undergo endothelial-like transdifferentiation. Thus, these results have important implications for understanding the role of cancer-associated fibroblasts and RB inactivation in promoting tumor angiogenesis.