It is now recognized that transforming growth factor beta (TGF-beta) is an important factor that regulates normal breast development as well as breast cancer. Genetically engineered mouse models have been used to determine the role and mechanism of TGF-beta action in normal development and diseases of the breast. Using these models, it has been determined that TGF-beta regulates many steps of normal mammary gland development including branching morphogenesis, functional differentiation, cell-lineage decisions, and involution. Effects of TGF-beta on normal development are mediated through signaling in both the epithelial and stromal compartments. In cancer, mouse models have indicated that TGF-beta has biphasic effects on tumor progression, acting as a tumor suppressor in early stages of cancer and promoting invasion and metastasis at later stages. In addition, TGF-beta may play a role in tumor progression through effects on the microenvironment. Recently, experiments in several mouse models have suggested that antagonism of TGF-beta signaling may provide a therapeutic target for late-stage breast cancer, blocking metastasis without detrimental side effects. In the future, genetically altered mice will be used to establish models of human breast disease providing opportunities to test strategies for disease prevention and treatment.