The Wnt (wingless) family of secreted glycoproteins initiates a signalling pathway implicated in the regulation of both normal mouse mammary gland development and tumorigenesis. Multiple Wnt signals ultimately converge on the multifunctional protein beta-catenin to activate the transcription of target genes. Although beta-catenin plays a crucial role in canonical Wnt signalling, it also functions in epithelial cell-cell adhesion at the adherens junctions. This study was designed to isolate beta-catenin's signalling function from its role in adherence during mouse mammary gland development. A transgenic dominant-negative beta-catenin chimera (beta-eng), which retains normal protein-binding properties of wild-type beta-catenin but lacks its C-terminal signalling domain, was expressed preferentially in the mammary gland. Thus, beta-eng inhibits the signalling capacity of endogenous beta-catenin, while preserving normal cell-cell adhesion properties. Analysis of the mammary gland in transgenic mice revealed a severe inhibition of lobuloalveolar development and a failure of the mice to nurse their young. Expression of beta-eng resulted in an induction of apoptosis both in transgenic mice and in retrovirally transduced HC11 cells. Thus, endogenous beta-catenin expression appears to be required to provide a survival signal in mammary epithelial cells, which can be suppressed by transgenic expression of beta-eng. Comparison of the timing of transgene expression with the transgenic phenotype suggested a model in which beta-catenin's survival signal is required in lobular progenitors that later differentiate into lobuloalveolar clusters. This study illustrates the importance of beta-catenin signalling in mammary lobuloalveolar development.