Mammary morphogenesis is an orchestrated process involving differentiation, proliferation and organization of cells to form a bi-layered epithelial network of ducts and lobules embedded in stromal tissue. We have engineered a 3D biomimetic human breast that makes it possible to study how stem cell fate decisions translate to tissue-level structure and function. Using this advancement, we describe the mechanism by which breast epithelial cells build a complex three-dimensional, multi-lineage tissue by signaling through a collagen receptor. Discoidin domain receptor tyrosine kinase 1 induces stem cells to differentiate into basal cells, which in turn stimulate luminal progenitor cells via Notch signaling to differentiate and form lobules. These findings demonstrate how human breast tissue regeneration is triggered by transmission of signals from the extracellular matrix through an epithelial bilayer to coordinate structural changes that lead to formation of a complex ductal-lobular network.