To study the role of transforming growth factor alpha (TGF alpha) in normal mammary development and mammary neoplasia in vivo, we have generated transgenic mice in which a human TGF alpha cDNA is expressed under the control of the MMTV enhancer/promoter. Overexpression of TGF alpha in the mammary epithelium, as confirmed by in situ hybridization and immunohistochemistry, is associated with hyperplasia of alveoli and terminal ducts in virgin female and pregnant transgenic mice. A range of morphologic abnormalities including lobular hyperplasia, cystic hyperplasia, adenoma, and adenocarcinoma is seen in mammary tissue of transgenic females. In contrast, no morphologic abnormalities are seen in transgenic males in spite of TGF alpha overexpression in salivary glands and reproductive organs. TGF alpha can therefore act as an oncogene in vivo and appears to predispose mammary epithelium to neoplasia and carcinoma.