The goal of this research was to establish methods for inducing mammary epithelial differentiation from nonmammary epithelium. For this purpose, mid-ventral or dorsal epidermis (skin epithelium; SKE) from 13-day rat or mouse embryos was associated with 13-day embryonic mouse mammary mesenchyme (mammary gland mesenchyme; MGM) (mouse MGM + rat or mouse SKE). The resultant MGM + SKE recombinants as well as controls (homotypic mouse mammary recombinants, homotypic mouse skin recombinants and mouse mammary mesenchyme by itself) were grafted under the renal capsule of syngeneic or athymic female nude mouse hosts. Most female hosts were induced to undergo lactogenesis by grafting an adult pituitary which elicited a state of hyperprolactinemia. Tissue recombinants of mouse MGM + rat or mouse SKE grown for 1 month in vivo formed a hair-bearing keratinized skin from which mammary ductal structures extended into the mesenchyme. The ducts were composed of columnar luminal epithelial cells as well as basal, actin-positive myoepithelial cells. When grown in pituitary-grafted hosts, the ductal epithelial cells expressed casein and α-lactalbumin as judged by immunocytochemistry. The expression of caseins in MGM + SKE recombinants was confirmed by Western blot. The epithelial cells in mouse MGM + rat SKE recombinants expressing milk proteins were shown to be rat cells while the surrounding connective tissue was composed of mouse cells based upon staining with Hoechst dye 33258. Using mammary-specific markers, these studies confirmed the earlier morphological studies of Propper and unequivocally demonstrated for the first time that embryonic mammary mesenchyme can induce morphological and functional mammary differentiation from nonmammary epithelium.