Breast cancer treatment has been increasingly successful over the last 20 years due in large part to targeted therapies directed against different subtypes. However, basal-like breast cancers still represent a considerable challenge to clinicians and scientists alike since the pathogenesis underlying the disease and the target cell for transformation of this subtype is still undetermined. The considerable similarities between basal-like and BRCA1 mutant breast cancers led to the hypothesis that these cancers arise from transformation of a basal cell within the normal breast epithelium through BRCA1 dysfunction. Recently, however, a number of studies have called this hypothesis into question. This review summarises the initial findings which implicated the basal cell as the cell of origin of BRCA1 related basal-like breast cancers, as well as the more recent data which identifies the luminal progenitor cells as the likely target of transformation. We compare a number of key studies in this area and identify the differences that could explain some of the contradictory findings. In addition, we highlight the role of BRCA1 in breast cell differentiation and lineage determination by reviewing recent findings in the field and our own observations suggesting a role for BRCA1 in stem cell regulation through activation of the p63 and Notch pathways. We hope that through an increased understanding of the BRCA1 role in breast differentiation and the identification of the cell(s) of origin we can improve treatment options for both BRCA1 mutant and basal-like breast cancer subgroups.