Gap junctions (GJ) are required for mammary epithelial differentiation. Using epithelial (SCp2) and myoepithelial-like (SCg6) mouse-derived mammary cells, the role of heterocellular interaction in assembly of GJ complexes and functional differentiation (beta-casein expression) was evaluated. Heterocellular interaction is critical for beta-casein expression, independent of exogenous basement membrane or cell anchoring substrata. Functional differentiation of SCp2, co-cultured with SCg6, is more sensitive to GJ inhibition relative to homocellular SCp2 cultures differentiated by exogenous basement membrane. Connexin (Cx)32 and Cx43 levels were not regulated across culture conditions; however, GJ functionality was enhanced under differentiation-permissive conditions. Immunoprecipitation studies demonstrated association of junctional complex components (alpha-catenin, beta-catenin and ZO-2) with Cx32 and Cx43, in differentiation conditions, and additionally with Cx30 in heterocellular cultures. Although beta-catenin did not shuttle between cadherin and GJ complexes, increased association between connexins and beta-catenin in heterocellular cultures was observed. This was concomitant with reduced nuclear beta-catenin, suggesting that differentiation in heterocellular cultures involves sequestration of beta-catenin in GJ complexes.