Breast epithelial stem cells are thought to be the primary targets in the aetiology of breast cancer. As breast cancers are predominantly oestrogen and progesterone receptor-positive (ERalpha/PR+), we investigated the biology of ERalpha/PR+ cells and their relationship to stem cells in normal human breast epithelium. Several complementary approaches were used to characterize the stem-cell population and relate it to ERalpha/PR+ cells, including dual label colocalization on tissue sections, isolation of a Hoechst dye-effluxing 'side population' using flow cytometry, and examination of DNA label retention. The intermediate or suprabasal population suggested by others to be breast stem cells comprises ERalpha/PR+ cells that coexpress the putative stem-cell markers including cytokeratin 19. Human breast epithelial cells with Hoechst dye-effluxing 'side population' properties characteristic of mammary stem cells in mice were demonstrated by lack of expression of myoepithelial and luminal cell-specific antigens such as CALLA and MUC1 to be undifferentiated cells. Using DNA radiolabelling of human tissue implanted into athymic nude mice, a population of label-retaining putative stem cells (LRC) were shown to be enriched for cells expressing the putative stem-cell markers p21CIP1/WAF1 and Musashi-1, which, interestingly, were expressed in separate subpopulations of ERalpha/PR+ cells. Finally, expression patterns of Musashi-1 and Notch-1 in relation to ERalpha/PR+ and adjacent proliferating cells suggest that the evolutionarily conserved Delta/Notch signalling pathway regulates asymmetric division of the putative stem-cell population. The data suggest a model in which ERalpha/PR+ cells scattered through the epithelium are stem cells that self-renew through asymmetric cell division and generate patches of transit amplifying and differentiated cells. ERalpha/PR+ breast cancers exhibit loss of the two key regulators of asymmetric cell division, Musashi-1 and Notch-1 and thus may arise from symmetric division of the ERalpha/PR+ stem cell.