Signaling by members of the epidermal growth factor receptor family plays an important role in breast development and breast cancer. Earlier work suggested that one of these receptors, ErbB4, is coupled to unique responses in this tissue. To determine the function of ErbB4 signaling in the normal mouse mammary gland, we inactivated ErbB4 signaling by expressing a COOH terminally deleted dominant-negative allele of ErbB4 (ErbB4DeltaIC) as a transgene in the mammary gland. Despite the expression of ErbB4DeltaIC from puberty through later stages of mammary development, an ErbB4DeltaIC-specific phenotype was not observed until mid-lactation. At 12-d postpartum, lobuloalveoli expressing ErbB4DeltaIC protein were condensed and lacked normal lumenal lactation products. In these lobuloalveoli, beta-casein mRNA, detected by in situ hybridization, was normal. However, whey acidic protein mRNA was reduced, and alpha-lactalbumin mRNA was undetectable. Stat5 expression was detected by immunohistochemistry in ErbB4DeltaIC-expressing tissue. However, Stat5 was not phosphorylated at Y694 and was, therefore, probably inactive. When expressed transiently in 293T cells, ErbB4 induced phosphorylation of Stat5. This phosphorylation required an intact Stat5 SH2 domain. In summary, our results demonstrate that ErbB4 signaling is necessary for mammary terminal differentiation and Stat5 activation at mid-lactation.