Decreased expression of the cyclin-dependent kinase (CDK) inhibitor p27(Kip1) is common in breast cancer and is associated with poor prognosis. p27 is also an important mediator of steroidal regulation of cell cycle progression. We have therefore investigated the role of p27 in mammary epithelial cell proliferation. Examination of the two major functions of p27, assembly of cyclin D1-Cdk4 complexes and inhibition of Cdk2 activity, revealed that cyclin D1-Cdk4 complex formation was not impaired in p27-/- mammary epithelial cells in primary culture. However, cyclin E-Cdk2 activity was increased approximately 3-fold, indicating that the CDK inhibitory function of p27 is important in mammary epithelial cells. Increased epithelial DNA synthesis was observed during pregnancy in p27-/- mammary gland transplants, but this was paralleled by increased apoptosis. During pregnancy and at parturition, development and differentiation of p27+/+ and p27-/- mammary tissue were indistinguishable. These results demonstrate a role for p27 in both the proliferation and survival of mammary epithelial cells. However, the absence of morphological and cellular defects in p27-/- mammary tissue during pregnancy raises the possibility that loss of p27 in breast cancer may not confer an overall growth advantage unless apoptosis is also impaired.