Breast cancer shows a high affinity towards the bone, causing bone-related complications leading to poor clinical prognosis. Approximately 80% of breast cancer patients die within five years after primary cancer has metastasized to the bones. The tumor stage strongly influences the survival rates of patients with breast cancer that has spread to bone at the time of diagnosis. There are currently no effective therapeutics available for bone metastases due to the failure of animal models and the scarcity of human bone metastasized samples, as most patients with advance stages of cancer are already in palliative care. Therefore, it is imperative to develop translational models to elucidate disease mechanisms at the cellular and molecular level. Here, we report the development of tissue-engineered nanoclay-based bone-mimetic three-dimensional (3D) in vitro model for studying later stages of cancer pathogenesis at the metastatic bone site using osteogenically-differentiated human mesenchymal stem cells (MSCs) and human breast cancer cells (MDA-MB-231 and MCF-7). This 3D model provides an ideal microenvironment suitable for cell-cell and cell-matrix interactions while retaining the behavior of breast cancer cells with different metastatic potential along with mimicking mesenchymal to epithelial transition (MET) of breast cancer cells. Sequential cultures of MSCs with MCF-7 gave rise to tumoroids, while sequential cultures of MSCs with MDA-MB-231 formed disorganized clusters of cells with poor cell-cell adhesion. We further evaluated how cancer-derived factors and cytokines affect bone leading to up to metastasis and conferring drug resistance, respectively. Results showed that Wnt/β-catenin and interleukin-6 (IL-6) mediated IL-6/STAT3 pathways are responsible for bone-related complications and conferring drug resistance, respectively. Furthermore, we have utilized the 3D in vitro model to develop methods for non-invasive and rapid prediction of cancer progression using various biophysical techniques such as spectroscopy and nanoindentation. Spectroscopy methods showed significant contributions of proteins, lipids, and nucleic acids, while the nanoindentation method showed F-actin mediated softening of cancer cells during cancer progression at the metastatic bone site, respectively. Collectively, 3D in vitro model provides an ideal platform for studying the molecular mechanism of breast cancer progression at the metastatic bone site, drug development, and discovery of biomarkers for cancer progression.