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In contrast to adult stem cells, induced pluripotent stem cells (iPSCs) can be grown robustly in vitro and differentiated into virtually any tissue, thus providing an attractive alternative for biomedical applications. Although iPSC technology is already being used in human biomedicine, its potential in animal production has not been investigated. Herein, we investigated the potential application of iPSCs in dairy production by generating bovine iPSCs and establishing their ability to generate mammary epithelial tissue. iPSCs were derived by retrovirus-mediated expression of murine Oct4, Sox2, Klf4, and c-Myc in mammary epithelium and dermal fibroblasts. The resulting reprogrammed cells stained positive for alkaline phosphatase and showed renewed expression of pluripotency genes, including Lin28, Rex1, Oct4, Sox2, and Nanog. In addition, injection of epithelial- or fibroblast-derived reprogrammed cells into nonobese diabetic (NOD/NOD) mice resulted in the formation of teratomas containing differentiated derivatives of the three germ layers, including cartilage, membranous ossification, stratified squamous epithelial tissue, hair follicles, neural pinwheels, and different types of glandular tissue. Finally, mammary epithelium-derived iPSCs could be induced to differentiate back to a mammary phenotype characterized by epithelial cells expressing cytokeratin 14 (CK14), CK18, and smooth muscle actin (SMA) as a result of treatment with 10 nM progesterone. This study reports for the first time the generation of iPSCs from bovine epithelial cells and demonstrates the potential of using iPSCs technology for generating bovine mammary tissue in vitro.