We have previously shown that isolated mouse fetal choroid plexus epithelial (CPE) cells penetrate a basement membrane matrix (Matrigel) substrate in vitro to form single-layered epithelial vesicles embedded within the matrix. To determine which properties of the matrix are important for inducing or permitting cells to penetrate the substrate and organize into multicellular vesicles we have made quantitative changes to the basement membrane components and growth factors in cell cultures. Matrigel diluted to 33 or 10% with a collagen I gel was not permissive to cell invasion, and CPE cells formed a polarized epithelial monolayer on the substrate surface which had ultrastructural characteristics similar to those of CPE vesicles. Cells in these monolayers proliferated more rapidly than cells in epithelial vesicles. When deliberately embedded within a 33 or 10% Matrigel matrix, CPE cells were able to form vesicles, indicating that a dilute matrix is nonpermissive to cell invasion but promotes epithelial polarization and organization into vesicles. Cells embedded within a 100% collagen I matrix did not proliferate or form epithelial vesicles and the majority of cells did not remain viable. Addition of laminin to the collagen I gel promoted cell adhesion and cell survival, but did not promote the formation of extensive monolayers on the substrate nor the formation of epithelial vesicles within the matrix. Cell invasion into the 33% Matrigel matrix was induced by addition of laminin, nidogen, or a laminin-nidogen complex to the substrate or by addition of TGFbeta2 to the culture medium, but not TGFbeta1 or PDGF. These studies show that CPE cells are sensitive to quantitative changes in matrix composition, which influences their survival and proliferation and also their ability to penetrate the matrix and organize into multicellular epithelial vesicles.