Transforming growth factor (TGF)–β signaling has been associated with early tumor suppression and late tumor progression; however, many of the mechanisms that mediate these processes are not known. Using Cre/LoxP technology, with the whey acidic protein promoter driving transgenic expression of Cre recombinase (WAP-Cre), we have now ablated the type II TGF-β receptor (TβRII) expression specifically within mouse mammary alveolar progenitors. Transgenic expression of the polyoma virus middle T antigen, under control of the mouse mammary tumor virus enhancer/promoter, was used to produce mammary tumors in the absence or presence of Cre (TβRII^(fl/fl);PY and TβRII^{(fl/fl);PY;WC}, respectively). The loss of TGF-β signaling significantly decreased tumor latency and increased the rate of pulmonary metastasis. The loss of TGF-β signaling was significantly correlated with increased tumor size and enhanced carcinoma cell survival. In addition, we observed significant differences in stromal fibrovascular abundance and composition accompanied by increased recruitment of F4/80⁺ cell populations in TβRII^{(fl/fl);PY;WC} mice when compared with TβRII^(fl/fl);PY controls. The recruitment of F4/80⁺ cells correlated with increased expression of known inflammatory genes including Cxcl1, Cxcl5, and Ptgs2 (cyclooxygenase-2). Notably, we also identified an enriched K5⁺ dNp63⁺ cell population in primary TβRII^{(fl/fl);PY;WC} tumors and corresponding pulmonary metastases, suggesting that loss of TGF-β signaling in this subset of carcinoma cells can contribute to metastasis. Together, our current results indicate that loss of TGF-β signaling in mammary alveolar progenitors may affect tumor initiation, progression, and metastasis through regulation of both intrinsic cell signaling and adjacent stromal-epithelial interactions in vivo. [Cancer Res 2008;68(6):1809–19]