An entire mammary epithelial outgrowth, capable of full secretory differentiation, may comprise the progeny of a single cellular antecedent. This conclusion is based upon the maintenance of retroviral insertion sites within the somatic DNA of successive transplant generations derived from a single mammary fragment. In addition, dissociation of these clonal dominant glands and implantation of dispersed cells at limiting dilution demonstrated that both duct-limited and lobule-limited outgrowths were developed as well as complete, fully differentiated glands. Thus, transplantation has revealed three distinct mammary epithelial progenitors in the mouse. Recently, using cre-lox conditional activation of reporter genes, the lobule-limited progenitor was lineally marked by lacZ expression. In situ, these cells were shown to regenerate secretory lobules upon successive pregnancies. In transplant studies, they demonstrated the capacity for self- renewal and contributed to the new generation of all of the epithelial cell types among mammary secretory lobules. Using this conditional activation model, cells isolated from other tissues of the WAP-Cre/Rosa26/lacZReporter mice, co-mingled with normal wild type mammary epithelial cells and transplanted into epithelium-divested mammary fat pads, were shown to be amenable to redirection of their cell fate by interaction with the mammary microenvironment in vivo. This suggests the ascendancy of the microenvironment over the intrinsic nature of somatic stem cells.