The mammary gland is a dynamic organ that undergoes extensive morphogenesis during the different stages of embryonic development, puberty, estrus, pregnancy, lactation and involution. Systemic and local cues underlie this constant tissue remodeling and act by eliciting an intricate pattern of responses in the mammary epithelial and stromal cells. Decades of studies utilizing methods such as transplantation and lineage tracing have identified a complex hierarchy of mammary stem cells, progenitors and differentiated epithelial cells that fuel mammary epithelial development. Importantly, these studies have extended our understanding of the molecular crosstalk between cell types, and signaling pathways maintaining normal homeostasis that often are deregulated during tumorigenesis. While several questions remain, this research has many implications for breast cancer. Fundamental among these are the identification of the cells of origin for the multiple subtypes of breast cancer and the understanding of tumor heterogeneity. A deeper understanding of these critical questions will unveil novel breast cancer drug targets and treatment paradigms. In this review, we provide a current overview of normal mammary development and tumorigenesis from a stem cell perspective.