Tumor microenvironment plays a critical role in regulating tumor progression by secreting factors that mediate cancer cell growth. Stromal fibroblasts can promote tumor growth through paracrine factors; however, restraint of malignant carcinoma progression by the microenvironment also has been observed. The mechanisms that underlie this paradox remain unknown. Here, we report that the tumorigenic potential of breast cancer cells is determined by an interaction between the Robo1 receptor and its ligand Slit2, which is secreted by stromal fibroblasts. The presence of an active Slit2/Robo1 signal blocks the translocation of β-catenin into nucleus, leading to downregulation of c-myc and cyclin D1 via the phosphoinositide 3-kinase (PI3K)/Akt pathway. Clinically, high Robo1 expression in the breast cancer cells correlates with increased survival in patients with breast cancer, and low Slit2 expression in the stromal fibroblasts is associated with lymph node metastasis. Together, our findings explain how a specific tumor microenvironment can restrain a given type of cancer cell from progression and show that both stromal fibroblasts and tumor cell heterogeneity affect breast cancer outcomes.