The response of the tumour microenvironment to anti-cancer drugs can influence treatment efficacy. Current drug-screening methodologies fail to distinguish and quantify simultaneously the concomitant effect of drugs on the tumour stroma and cancer cells. To overcome this limitation we have developed a fluorescence-based experimental model that employs mCherry-labelled stromal cells (e.g. bone marrow fibroblastic stromal cells) co-cultured in direct contact with enhanced green fluorescent protein-labelled tumour cell lines for accurate assessment of proliferation and viability in both cell compartments and adhesion of tumour cells. Additionally, we used fluorescence-based image analysis to determine morphological changes that correlate with cell function (e.g. morphology of the actin cytoskeleton and nuclearity of osteoclasts to predict their bone resorption activity). Using this platform we have revealed that dexamethasone induces HS5 fibroblast proliferation and contact with multiple myeloma cells via a process involving Src/c-Abl kinases. Osteoclasts also inhibited dexamethasone-induced apoptosis in myeloma cells while retaining their normal morphology and functionality in bone resorption. Myeloma resistance to dexamethasone mediated by HS5 cells and osteoclasts was reversed by treatment with the Src/c-Abl inhibitor dasatinib but not with bortezomib. This new experimental platform provides a more precise screening of new therapeutics for improved efficacy of tumour cell killing within the bone marrow microenvironment.