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The main focus of this review is the role of mammary stem cells in normal breast development and carcinogenesis. We have developed a new in vitro culture system that permits, for the first time, the propagation of mammary stem and progenitor cells in an undifferentiated state, which should facilitate the elucidation of pathways that regulate normal mammary stem-cell self-renewal and differentiation. Furthermore, we propose a model in which transformation of stem cells, or early progenitor cells, results in carcinogenesis. A key event in this process is the deregulation of normal self-renewal in these cells. Transformed mammary stem or progenitor cells undergo aberrant differentiation processes that result in generation of the phenotypic heterogeneity found in human and rodent breast cancers. This phenotypic diversity is driven by a small subset of mammary tumour stem cells. We will discuss the important implications of this mammary tumour stem-cell model. [ABSTRACT FROM AUTHOR]