FGF signaling is essential for mammary gland development, yet the mechanisms by which different members of the FGF family control stem cell function and epithelial morphogenesis in this tissue are not well understood. Here, we have examined the requirement of Fgfr2 in mouse mammary gland morphogenesis using a postnatal organ regeneration model. We found that tissue regeneration from basal stem cells is a multistep event, including luminal differentiation and subsequent epithelial branching morphogenesis. Basal cells lacking Fgfr2 did not generate an epithelial network owing to a failure in luminal differentiation. Moreover, Fgfr2 null epithelium was unable to undergo ductal branch initiation and elongation due to a deficiency in directional migration. We identified FGF10 and FGF2 as stromal ligands that control distinct aspects of mammary ductal branching. FGF10 regulates branch initiation, which depends on directional epithelial migration. By contrast, FGF2 controls ductal elongation, requiring cell proliferation and epithelial expansion. Together, our data highlight a pleiotropic role of Fgfr2 in stem cell differentiation and branch initiation, and reveal that different FGF ligands regulate distinct aspects of epithelial behavior.