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Female BRCA1 mutation carriers have a nearly 80% probability of developing breast cancer during their life-time. We hypothesized that the breast epithelium at risk in BRCA1 mutation carriers harbors mammary epithelial cells (MEC) with altered proliferation and differentiation properties. Using a three-dimensional culture technique to grow MECs ex vivo, we found that the ability to form colonies, an indication of clonality, was restricted to the aldehyde dehydrogenase 1-positive fraction in MECs but not in HCC1937 BRCA1-mutant cancer cells. Primary MECs from BRCA1 mutation carriers (n = 9) had a 28% greater ability for clonal growth compared with normal controls (n = 6; P = 0.006), and their colonies were significantly larger. Colonies in controls and BRCA1 mutation carriers stained positive for BRCA1 by immunohistochemistry, and 79% of the examined single colonies from BRCA1 carriers retained heterozygosity for BRCA1 (ROH). Colonies from BRCA1 mutation carriers frequently showed high epidermal growth factor receptor (EGFR) expression (71% EGFR positive versus 44% in controls) and were negative for estrogen receptor (ERalpha; 32% ER negative, 44% mixed, 24% ER positive versus 90% ER positive in controls). Expression of CK14 and p63 were not significantly different. Microarray studies revealed that colonies from BRCA1-mutant PMECs anticipate expression profiles found in BRCA1-related tumors, and that the EGFR pathway is up-regulated. We conclude that BRCA1 haploinsufficiency leads to an increased ability for clonal growth and proliferation in the PMECs of BRCA1 mutation carriers, possibly as a result of EGFR pathway activation. These altered growth and differentiation properties may render BRCA1-mutant PMECs vulnerable to transformation and predispose to the development of ER-negative, EGFR-positive breast cancers.