Epithelial branch elongation is a central developmental process during branching morphogenesis in diverse organs. This fundamental growth process into large arborized epithelial networks is accompanied by structural reorganization of the surrounding extracellular matrix (ECM), well beyond its mechanical linear response regime. Here, we report that epithelial ductal elongation within human mammary organoid branches relies on the non-linear and plastic mechanical response of the surrounding collagen. Specifically, we demonstrate that collective back-and-forth motion of cells within the branches generates tension that is strong enough to induce a plastic reorganization of the surrounding collagen network which results in the formation of mechanically stable collagen cages. Such matrix encasing in turn directs further tension generation, branch outgrowth and plastic deformation of the matrix. The identified mechanical tension equilibrium sets a framework to understand how mechanical cues can direct ductal branch elongation.