Canonical Wnt signaling has emerged as a critical regulatory pathway for stem cells. The association between ectopic activation of Wnt signaling and many different types of human cancer suggests that Wnt ligands can initiate tumor formation through altered regulation of stem cell populations. Here we have shown that mice deficient for the Wnt co-receptor Lrp5 are resistant to Wnt1-induced mammary tumors, which have been shown to be derived from the mammary stem/progenitor cell population. These mice exhibit a profound delay in tumorigenesis that is associated with reduced Wnt1-induced accumulation of mammary progenitor cells. In addition to the tumor resistance phenotype, loss of Lrp5 delays normal mammary development. The ductal trees of 5-week-old Lrp5-/- females have fewer terminal end buds, which are structures critical for juvenile ductal extension presumed to be rich in stem/progenitor cells. Consequently, the mature ductal tree is hypomorphic and does not completely fill the fat pad. Furthermore, Lrp5-/- ductal cells from mature females exhibit little to no stem cell activity in limiting dilution transplants. Finally, we have shown that Lrp5-/- embryos exhibit substantially impaired canonical Wnt signaling in the primitive stem cell compartment of the mammary placodes. These findings suggest that Lrp5-mediated canonical signaling is required for mammary ductal stem cell activity and for tumor development in response to oncogenic Wnt effectors.