Distinct subsets of cells, including cells with stem cell-like properties, have been proposed to exist in normal human breast epithelium and breast carcinomas. The cellular origins of epithelial cells contributing to gland development, tissue homeostasis and cancer are, however, still poorly understood. The mouse is a widely used model of mammary gland development, both directly by studying the mouse mammary epithelial cells themselves and indirectly, by studying development, morphogenesis, differentiation and carcinogenesis of xenotransplanted human breast epithelium in vivo. While in early studies, human or mouse epithelium was implanted as fragments into the mouse gland, more recent technical progress has allowed the self-renewal capacity and differentiation potential of distinct cell populations or even individual cells to be interrogated. Here, we review and discuss similarities and differences between mouse and human gland development with particular emphasis on the identity and localization of stem cells, and the influence of the surrounding microenvironment. It is concluded that while recent advances in the field have contributed immense insight into how the normal mammary gland develops and is maintained, significant discrepancies exist between the mouse and human gland which should be taken into consideration in current and future models of mammary stem cell biology.