Breast cancer development is a complex pathobiological process involving sequential genetic alterations in normal epithelial cells that results in uncontrolled growth in a permissive microenvironment. Accordingly, physiologically relevant models of human breast cancer that recapitulate these events are needed to study cancer biology and evaluate therapeutic agents. Here, we report the generation and utilization of the human breast cancer in mouse (HIM) model, which is composed of genetically engineered primary human breast epithelial organoids and activated human breast stromal cells. By using this approach, we have defined key genetic events required to drive the development of human preneoplastic lesions as well as invasive adenocarcinomas that are histologically similar to those in patients. Tumor development in the HIM model proceeds through defined histological stages of hyperplasia, DCIS to invasive carcinoma. Moreover, HIM tumors display characteristic responses to targeted therapies, such as HER2 inhibitors, further validating the utility of these models in preclinical compound testing. The HIM model is an experimentally tractable human in vivo system that holds great potential for advancing our basic understanding of cancer biology and for the discovery and testing of targeted therapies.