The mouse mammary gland is composed of three epithelial cell types, which include ductal, alveolar and myoepithelial cells. A hierarchy in which the mammary stem cell compartment gives rise to progressively restricted progenitors that ultimately form the luminal (ductal and alveolar) and myoepithelial lineages is now emerging. Although very little is known about the mechanisms controlling the differentiation of the myoepithelial cell lineage, a growing body of work reveals that the luminal cell fate is specified by a network of transcription factors. The precise roles of specific transcription factors in promoting differentiation of luminal progenitors into ductal or alveolar cells are now being elucidated. This review will discuss the importance of these recent observations and place them within the context of other transcription factor networks involved in mammary gland development and tumorigenesis.