ErbB3 harbors weak kinase activity, but strongly activates downstream phosphatidylinositol 3-kinase/Akt signaling through heterodimerization with and activation by other ErbB receptor tyrosine kinases. We report here that ErbB3 loss in the luminal mammary epithelium of mice impaired Akt and MAPK signaling and reduced luminal cell proliferation and survival. ERBB3 mRNA expression levels were highest in luminal mammary populations and lowest in basal cell/stem cell populations. ErbB3 loss in mammary epithelial cells shifted gene expression patterns toward a mammary basal cell/stem cell signature. ErbB3 depletion-induced gene expression changes were rescued upon activation of Akt and MAPK signaling. Interestingly, proliferation and expansion of the mammary basal epithelium (BE) occurred upon ErbB3 targeting in the luminal epithelium, but not upon its targeting in the BE. Multiple cytokines, including interleukin 6, were induced upon ErbB3 depletion in luminal epithelium cells, which increased growth of BE cells. Taken together, these results suggest that ErbB3 regulates the balance of differentiated breast epithelial cell types by regulating their growth and survival through autocrine- and paracrine-signaling mechanisms.