Skeletal metastasis of breast cancer is associated with a poor prognosis and significant morbidity. Investigations in other solid tumors have revealed an impairment in hematopoietic function upon bone marrow invasion. However, the interaction between disseminated breast cancer cells and the bone marrow microenvironment which harbors them has not been addressed comprehensively. Employing advanced co-culture assays, proteomic studies, organotypic models as well as in vivo xenotransplant models, we define the consequences of this interaction on the stromal compartment of bone marrow, affected molecular pathways and subsequent effects on the hematopoietic stem and progenitor cells (HSPCs). The results showed a basic fibroblast growth factor (bFGF)-mediated, synergistic increase in proliferation of breast cancer cells and mesenchymal stromal cells (MSCs) in co-culture. The stromal induction was associated with elevated phosphoinositide-3 kinase (PI3K) signaling in the stroma, which coupled with elevated bFGF levels resulted in increased migration of breast cancer cells towards the MSCs. The perturbed cytokine profile in the stroma led to reduction in the osteogenic differentiation of MSCs via downregulation of platelet-derived growth factor-BB (PDGF-BB). Long term co-cultures of breast cancer cells, HSPCs, MSCs and in vivo studies in NOD.Cg-Prkdc^scid Il2rg^tm1Wjl/SzJ (NSG) mice showed a reduced support for HSPCs in the altered niche. The resultant non- conducive phenotype of the niche for HSPC support emphasizes the importance of the affected molecular pathways in the stroma as clinical targets. These findings can be a platform for further development of therapeutic strategies aiming at the blockade of bone marrow support to disseminated breast cancer cells. Stem Cells 2016;34:2224–2235.