The epidermal growth factor (EGF) system has been thought to play an important role in normal mammary development and carcinogenesis. To study the role of the EGF receptor (EGFR) in mammary development, we developed a transgenic mouse model in which a C-terminal truncated mouse EGFR (EGFR-TR) was expressed in the mouse mammary epithelium under the control of the mouse mammary tumor virus long terminal repeat. The EGFR-TR lacks most of the cytoplasmic domain of the receptor, including the entire protein tyrosine kinase domain. In cultured cells, we show that it acts in a dominant negative manner in EGF-signaled EGFR autophosphorylation. Several lines of mice were characterized and shown to express the transgene at the mRNA and protein levels not only in the mammary gland but also in the salivary glands, epididymis, and prostate. In postpubertal virgin female mice, the expression of the EGFR-TR in the mammary glands was greater than the expression of the endogenous wild type EGFR. In these virgin mice, inhibition in mammary ductal development and a decrease of mammary epithelial DNA synthesis were observed beginning at 5–6 weeks. The inhibition of duct development was most apparent by 15–16 weeks, resulting in a significant defect in ductal branching and outgrowth and an apparent overall decrease in the size of the mammary glands. However, during pregnancy, expression of the endogenous wild type EGFR was markedly increased relative to the EGFR-TR and, at this stage, normal presecretory alveoli developed from the hypoplastic duct tree. Postpartum, normal lactation occurred. Despite EGFR-TR expression in other tissues, no morphological abnormalities were observed. This model demonstrates that the EGFR-TR behaves as a dominant negative regulator of the EGFR system in vivo and that the EGFR system plays an important role in mammary ductal development.