Wnt/beta-catenin signaling pathway is involved in the maintenance of the progenitor cell population in the skin, intestine and other tissues, and its aberrant activation caused by stabilization of beta-catenin contributes to tumorigenesis. In the mammary gland, constitutive activation of Wnt/beta-catenin signaling in luminal secretory cells results in precocious lobuloalveolar differentiation and induces adenocarcinomas, whereas the impact of this signaling pathway on the function of the second major mammary epithelial cell lineage, the basal myoepithelial cells, has not been analyzed. We have used the keratin (K) 5 promoter to target the expression of stabilized N-terminally truncated beta-catenin to the basal cell layer of mouse mammary epithelium. The transgenic mice presented an abnormal mammary phenotype: precocious lateral bud formation, increased proliferation and premature differentiation of luminal epithelium in pregnancy, persistent proliferation in lactation and accelerated involution. Precocious development in pregnancy was accompanied by increased Myc and cyclin D1 transcript levels, and a shift in p63 variant expression towards the DeltaNp63 form. The expression of ECM-degrading proteinases and their inhibitors was altered in pregnancy and involution. Nulliparous transgenic females developed mammary hyperplasia that comprised undifferentiated basal (K5/14-positive, K8- and alpha-smooth muscle-actin-negative) cells. Multiparous mice, in addition, developed invasive basal-type carcinomas. Thus, activation of beta-catenin signaling in basal mammary epithelial cells affects the entire process of mammary gland development and induces amplification of basal-type cells that lack lineage markers, presumably, a subpopulation of mammary progenitors able to give rise to tumors.