Endoplasmic reticulum (ER) stress signaling can be mediated by the ER kinase PERK, which phosphorylates its substrate eIF2alpha. This in turn, results in translational repression and the activation of downstream programs that can limit cell growth through cell cycle arrest and/or apoptosis. These responses can also be initiated by perturbations in cell adhesion. Thus, we hypothesized that adhesion-dependent regulation of PERK signaling might determine cell fate. We tested this hypothesis in a model of mammary acini development, a morphogenetic process regulated in part by adhesion signaling. Here we report a novel role for PERK in limiting MCF10A mammary epithelial cell proliferation during acinar morphogenesis in 3D Matrigel culture as well as in preventing mammary tumor formation in vivo. We show that loss of adhesion to a suitable substratum induces PERK-dependent phosphorylation of eIF2alpha and selective upregulation of ATF4 and GADD153. Further, inhibition of endogenous PERK signaling during acinar morphogenesis, using two dominant-negative PERK mutants (PERK-DeltaC or PERK-K618A), does not affect apoptosis but results instead in hyper-proliferative and enlarged lumen-filled acini, devoid of proper architecture. This phenotype correlated with an adhesion-dependent increase in translation initiation, Ki67 staining and upregulation of Laminin-5, ErbB1 and ErbB2 expression. More importantly, the MCF10A cells expressing PERKDeltaC, but not a vector control, were tumorigenic in vivo upon orthotopic implantation in denuded mouse mammary fat pads. Our results reveal that the PERK pathway is responsive to adhesion-regulated signals and that it is essential for proper acinar morphogenesis and in preventing mammary tumor formation. The possibility that deficiencies in PERK signaling could lead to hyperproliferation of the mammary epithelium and increase the likelihood of tumor formation, is of significance to the understanding of breast cancer.