In this study, we ®rst describe expression of the paired domain transcription factor PAX2 in the normal and cancerous human breast, then demonstrate in a murine model a novel function for PAX2 in the regulation of progesterone stimulation of secondary ductal growth. In human mammary tissue, PAX2 expression was coincident with sub-populations of mammary ductal cells, some of which possessed an undi erentiated histiotype, and was also found in 450% of the human breast tumors surveyed (n=38). In the mouse, mammary parenchyma with a targeted deletion of PAX2 developed normal ductal systems when grafted into wild-type host mammary fat pads, but failed to undergo higher order side-branching and lobular development in response to progesterone. A previously unsuspected PAX2/WT1 (Wilms' tumor suppressor gene) regulatory axis in the mammary gland was also indicated. Using RT ± PCR, a signi®cant reduction in WT1 mRNA expression was detected in the PAX2 mutant glands compared to wildtype counterparts and double-antibody immunohistochemistry detected the co-localization of PAX2 and WT1 in the nuclei of normal and cancerous breast cells. These data indicate a role for PAX2 (and possibly WT1) in the regulation of the progesterone response of the mature mammary gland. The potential contribution of PAX2 to breast tumor pathogenesis is discussed.