The ovarian steroids estrogen and progesterone (E(2) and P) are essential for normal mammary gland growth and development; however, the mechanisms by which they influence the proliferative activity of the mammary epithelium remain unclear. Mammary epithelial cells cells expressing the receptors for E(2) and P (ER and PR respectively) are separate from, although often adjacent to, those capable of proliferating, implying that the ovarian steroids act indirectly via paracrine or juxtacrine growth factors to stimulate entry into the cell cycle. A large number of candidate factors have been identified in a variety of different experimental systems, and it appears that transforming growth factor beta may play a role in preventing proliferation of steroid receptor-containing cells. Dysregulation of the strict inverse relationship between ERalpha expression and proliferation is detectable in premalignant human breast lesions, indicating that it might be essential to the tumorigenic process. Challenges for the future include determining which of the candidates identified as being mediators of the effects of E(2) are physiologically and clinically relevant as well as finding out how ERalpha-containing cells become proliferative during tumorigenesis. Answering these questions could greatly increase our understanding of the factors controlling mammary gland development and the processes leading to cancer formation.