The recent identification of mouse mammary stem cells (MaSCs) and progenitor subpopulations has enhanced the prospect of investigating the genetic control of their lineage specification and differentiation. Here we have explored the role of the Notch pathway within the mammary epithelial hierarchy. We show that knockdown of the canonical Notch effector Cbf-1 in the MaSC-enriched population results in increased stem cell activity in vivo as well as the formation of aberrant end buds, implying a role for endogenous Notch signaling in restricting MaSC expansion. Conversely, Notch was found to be preferentially activated in the ductal luminal epithelium in vivo and promoted commitment of MaSCs exclusively along the luminal lineage. Notably, constitutive Notch signaling specifically targeted luminal progenitor cells for expansion, leading to hyperplasia and tumorigenesis. These findings reveal key roles for Notch signaling in MaSCs and luminal cell commitment and further suggest that inappropriate Notch activation promotes the self-renewal and transformation of luminal progenitor cells.