MMP-11 is a bad prognosis paracrine factor in invasive breast cancers. However, its mammary physiological function remains largely unknown. In the present study we have investigated MMP-11 function during postnatal mammary gland development and function using MMP-11-deficient (MMP-11-/-) mice. Histological and immunohistochemical analyses as well as whole-mount mammary gland staining show alteration of the mammary gland in the absence of MMP-11, where ductal tree, alveolar structures and milk production are reduced. Moreover, a series of transplantation experiments allowed us to demonstrate that MMP-11 exerts an essential local paracrine function that favors mammary gland branching and epithelial cell outgrowth and invasion through adjacent connective tissues. Indeed, MMP-11-/- cleared fat pads are not permissive for wild-type epithelium development, whereas MMP-11-/- epithelium transplants grow normally when implanted in wild-type cleared fat pads. In addition, using primary mammary epithelial organoids, we show in vitro that this MMP-11 pro-branching effect is not direct, suggesting that MMP-11 acts via production/release of stroma-associated soluble factor(s). Finally, the lack of MMP-11 leads to decreased periductal collagen content, suggesting that MMP-11 has a role in collagen homeostasis. Thus, local stromal MMP-11 might also regulate mammary epithelial cell behavior mechanically by promoting extracellular matrix stiffness. Collectively, the present data indicate that MMP-11 is a paracrine factor involved during postnatal mammary gland morphogenesis, and support the concept that the stroma strongly impact epithelial cell behavior. Interestingly, stromal MMP-11 has previously been reported to favor malignant epithelial cell survival and promote cancer aggressiveness. Thus, MMP-11 has a paracrine function during mammary gland development that might be harnessed to promote tumor progression, exposing a new link between development and malignancy.