To further our understanding of progesterone (P) as an endocrine mammogen, a PR(lacz) knockin mouse was generated in which the endogenous progesterone receptor (PR) promoter directly regulated lacZ reporter expression. The PR(lacz) mouse revealed PR promoter activity was restricted to the epithelial compartment during the prenatal and postnatal stages of mammary gland development. At puberty, PR promoter activity was unexpectedly robust and restricted to the body cells within the terminal end buds and to the luminal epithelial cells in the subtending ducts. In the adult, the preferential localization of PR(lacz) positive cells to the distal regions of ductal side branches provided a cellular context to the recognized mandatory role of P in ductal side-branching, and segregation of these cells from cells that undergo proliferation supported an intraepithelial paracrine mode of action for P in branching morphogenesis. Toward the end of pregnancy, the PR(lacz) mouse disclosed a progressive attenuation in PR promoter activity, supporting the postulate that the preparturient removal of the proliferative signal of P is a prerequisite for the emergence of a functional lactating mammary gland. The data suggest that PR expression before pregnancy is to ensure the specification and spatial organization of ductal and alveolar progenitor cell lineages, whereas abrogation of PR expression before lactation is required to enable terminal differentiation of the mammary gland.