Postnatal development of the mammary gland requires interactions between the epithelial and stromal compartments, which regulate actions of hormones and growth factors. IGF-I is expressed in both epithelial and stromal compartments during postnatal development of the mammary gland. However, little is known about how local expression of IGF-I in epithelium or stroma regulates mammary growth and differentiation during puberty and pregnancy-induced alveolar development. The goal of this study was to investigate the mechanisms of IGF-I actions in the postnatal mammary gland and test the hypothesis that IGF-I expressed in stromal and epithelial compartments has distinct functions. We established mouse lines with inactivation of the igf1 gene in mammary epithelium by crossing igf1/loxP mice with mouse lines expressing Cre recombinase under the control of either the mouse mammary tumor virus long-terminal repeat or the whey acidic protein gene promoter. Epithelial-specific loss of IGF-I during pubertal growth resulted in deficits in ductal branching. In contrast, heterozygous reduction of IGF-I throughout the gland decreased expression of cyclins A2 and B1 during pubertal growth and resulted in alterations in proliferation of the alveolar epithelium and milk protein levels during pregnancy-induced differentiation. Reduction in epithelial IGF-I at either of these stages had no effect on these indices. Taken together, our results support distinct roles for IGF-I expressed in epithelial and stromal compartments in mediating growth of the postnatal mammary gland.