Cancers develop in a complex mutational landscape. Interaction of genetically abnormal cancer cells with normal stromal cells can modify the local microenvironment to promote disease progression for some tumor types. Genetic models of tumorigenesis provide the opportunity to explore how combinations of cancer driver mutations confer distinct properties on tumors. Previous Drosophila models of EGFR-driven cancer have focused on epithelial neoplasia. Here, we report a Drosophila genetic model of EGFR-driven tumorigenesis in which the neoplastic transformation depends on interaction between epithelial and mesenchymal cells. We provide evidence that the secreted proteoglycan Perlecan can act as a context-dependent oncogene cooperating with EGFR to promote tumorigenesis. Coexpression of Perlecan in the EGFR-expressing epithelial cells potentiates endogenous Wg/Wnt and Dpp/BMP signals from the epithelial cells to support expansion of a mesenchymal compartment. Wg activity is required in the epithelial compartment, whereas Dpp activity is required in the mesenchymal compartment. This genetically normal mesenchymal compartment is required to support growth and neoplastic transformation of the genetically modified epithelial population. We report a genetic model of tumor formation that depends on crosstalk between a genetically modified epithelial cell population and normal host mesenchymal cells. Tumorigenesis in this model co-opts a regulatory mechanism that is normally involved in controlling growth of the imaginal disc during development.