The role of WT1 (Wilm's tumor suppressor gene) in breast cancer is controversial, with evidence for both tumor-promoting and tumor-suppressing activities. In order to address this question, we expressed different WT1 isoforms in the mammary epithelial cell line H16N-2, which does not express endogenous WT1. Cells were stably transfected with either WT1 (-Ex5/-KTS) or WT1 (+Ex5/+KTS) under the control of the inducible metallothionein promoter. Induction of WT1 (-Ex5/-KTS) upregulated p21, causing a slowing of proliferation and a G2-phase cell cycle arrest. In artificial basement membrane, the WT1 (-Ex5/-KTS) isoform promoted the appearance of highly organized acinar cellular aggregates. In contrast, WT1 (+Ex5/+KTS) had no effect on p21 or proliferation, but rather caused an epithelial-mesenchymal transition and a redistribution of E-cadherin from the cell membrane to the cytoplasm. This isoform also causes the cellular aggregates growing in artificial basement membrane to appear significantly less organized than control cells. Thus, different WT1 isoforms have distinct effects in this cell line, suggesting that depending on the ratio of WT1 isoform expression in mammary epithelial cells, WT1 could function to either promote or suppress a transformed phenotype.