LMO4, a member of the LIM-only family of zinc-finger proteins, is overexpressed in a significant proportion of breast carcinomas and acts as a negative regulator of mammary epithelial differentiation. To delineate cell types within the developing mouse mammary gland that express Lmo4, we analysed different stages of mammopoiesis by immunohistochemistry. Lmo4 was found to be highly expressed in the proliferating cap cells of the terminal end bud and in the ductal and alveolar luminal cells of the mature mammary gland but was negligible or low in myoepithelial cells. To assess the physiological role of Lmo4 in the mammary gland, we generated conditionally targeted mice lacking Lmo4 in the mammary epithelium during pregnancy. Acute loss of Lmo4 in late pregnancy impaired lobuloalveolar development, accompanied by a two-fold reduction in the percentage of BrdU-positive cells. In contrast, germline loss of Lmo4 did not alter lobuloalveolar development arising from transplanted mammary anlagen, implying the existence of a compensatory mechanism in these knockout mice. Thus, the use of a conditional targeting strategy has revealed that Lmo4 is required for proper development of the mammary gland during pregnancy and indicated that Lmo4 acts as a positive regulator of alveolar epithelial proliferation.