Signal transducer and activator of transcription (Stat) 5 appears to play a vital role in prolactin (PRL)-induced cell differentiation and normal mammary gland development. We previously showed that PRL-activated Stat5a induced expression of E-cadherin-beta-catenin complex in vitro and in xenotransplant tumors in vivo led to inhibition of breast cancer invasion. In the present study, we show that human breast cancer cells co-overexpressing Stat5a and its tyrosine kinase (Jak) 2 cultured in three-dimensional (3D) Matrigel culture demonstrate changes consistent with induction of mesenchymal-epithelial redifferentiation. Jak2 and Stat5a-co-overexpressing cells treated with cocktail (PRL, dexamethasone, and insulin), effectively reverse epithelial-mesenchymal transition by stimulating 3D organoids more reminiscent of the acinar growth of normal mammary epithelial cells, compared with cells overexpressing only Stat5a or Jak2. In contrast, dominant-negative dominant-negative-Stat5 blocks 3D organoid formation, causing cells to grow in layers instead. Hyperactivation of Jak2 and Stat5a in T-47D cells induces alveolar-like structures, mamospheres, with marked lumen formation through central apoptosis and restores a polarized epithelial phenotype. However, Jak2 and Stat5a overexpression in BT-20 cells induces partially differentiated 3D organoids with no central lumen, but effectively re-expresses estrogen receptor alpha. Jak2 and Stat5a-induced 3D differentiated organoids are accompanied by increased expression of E-cadherin, zonula occludens-1, and cytokeratins 8 and 18, and decreased levels of vimentin and Snail, indicating a shift from a mesenchymal phenotype toward an epithelial phenotype. Collectively, Jak2 and Stat5a co-overexpression cooperatively reverses epithelial-mesenchymal transition and promotes differentiation in human breast cancer cells, which may provide a mechanism to explain the invasive suppressor role of PRL-activated Stat5a in mammary cancer cells.