Hematopoietic PBX‐interacting protein (HPIP, also known as PBXIP1) is an estrogen receptor (ER) interacting protein that regulates estrogen‐mediated breast cancer cell proliferation and tumorigenesis. However, its functional significance in the context of mammary gland development is unexplored. Here, we report that HPIP is required for prolactin (PRL)‐induced lactogenic differentiation in vitro. Molecular analysis of HPIP expression in mice revealed its induced expression at pregnancy and lactation stages of mammary gland. Moreover, PRL is a lactogenic hormone that controls pregnancy as well as lactation and induces Hpip/Pbxip1 expression in a signal transducer and activator of transcription 5a‐dependent manner. Using mammary epithelial and lactogenic‐competent cell lines, we further show that HPIP plays a regulatory role in PRL‐mediated mammary epithelial cell differentiation, which is measured by acini formation, β‐casein synthesis, and lipid droplet formation. Further mechanistic studies using pharmacological inhibitors revealed that HPIP modulates PRL‐induced β‐casein synthesis via phosphoinositide 3‐kinase (PI3K)/protein kinase B (AKT) activation. This study also identified HPIP as a critical regulator of autocrine PRL signaling as treatment with the PRL receptor antagonist Δ1‐9‐G129R‐hPRL restrained HPIP‐mediated PRL synthesis, AKT activation, and β‐casein synthesis in cultured HC11 cells. Interestingly, we also uncovered that microRNA‐148a (miR‐148a) antagonizes HPIP‐mediated mammary epithelial cell differentiation. Together, our study identified HPIP as a critical regulator of PRL signaling and revealed a novel molecular circuitry involving PRL, HPIP, PI3K/AKT, and miR‐148a that controls mammary epithelial cell differentiation in vitro.