The ERBB family of type 1 receptor tyrosine kinases and their ligands have crucial functions during mammopoiesis, but the signaling networks that ultimately regulate ERBB activity in the breast have remained elusive. Here,we show that mice with Cre-lox mediated deletions of both Erbb4alleles within the developing mammary gland (Erbb4Flox/FloxWap-Cre) fail to accumulate lobuloalveoli or successfully engage lactation at parturition owing, in part, to impaired epithelial proliferation. Analysis of the mammary differentiation factor STAT5 by immunohistochemistry and western blot revealed a complete ablation of STAT5 activation in Erbb4Flox/FloxWap-Cre mammary epithelium at parturition. Consistent with disrupted STAT5 function, Erbb4Flox/FloxWap-Cre mammary glands at parturition failed to express the mammary epithelial differentiation marker NPT2B. Defects in epithelial functional differentiation at parturition were accompanied by a profound reduction in expression of the STAT5-regulated milk genes casein beta and whey acidic protein. We propose that ERBB4 functions as an essential mediator of STAT5 signaling, and that loss of STAT5 activity contributes to the impaired functional differentiation of mammary glands observed in mice containing conditional Erbb4 deletions.