The RNA-binding protein Musashi1 (Msi1) is a positive regulator of Notch-mediated transcription in Drosophila melanogaster and neural progenitor cells and has been identified as a putative human breast stem cell marker. Here we describe a novel functional role for Msi1: its ability to drive progenitor cell expansion along the luminal and myoepithelial lineages. Expression of Msi1 in mammary epithelial cells increases the abundance of CD24(hi) Sca-1(+), CD24(hi) CD29(+), CK19, CK6, and double-positive CK14/CK18 progenitor cells. Proliferation is associated with increased proliferin-1 (PLF1) and reduced Dickkopf-3 (DKK3) secretion into the conditioned medium from Msi-expressing cells, which is associated with increased colony formation and extracellular signal-regulated kinase (ERK) phosphorylation. Treatment with the MEK inhibitor U0126 inhibits ERK activation and decreases Notch and beta-catenin/T-cell factor (TCF) reporter activity resulting from Msi1 expression. Reduction of DKK3 in control cells with a short hairpin RNA (shRNA) increases Notch and beta-catenin/TCF activation, whereas reduction of PLF1 with a shRNA in Msi1-expressing cells inhibits these pathways. These results identify Msi1 as a key determinant of the mammary lineage through its ability to coordinate cell cycle entry and activate the Notch and Wnt pathways by a novel autocrine process involving PLF1 and DKK3.