Postnatal development of the mammary gland requires interactions between the epithelial and stromal compartments, which regulate actions of hormones and growth factors. Insulin-like growth factor I is expressed in both epithelial and stromal compartments during postnatal development of the mammary gland. However, little is known about how local expression of IGF-I in epithelium or stroma regulates mammary growth and differentiation during puberty and pregnancy-induced alveolar development. The goal of this study was to investigate the mechanisms of IGF-I actions in the postnatal mammary gland and to test the hypothesis that IGF-I expressed in stromal and epithelial compartments has distinct functions. We established mouse lines with inactivation of the igf1 gene in mammary epithelium by crossing igf1/loxP mice with mouse lines expressing Cre recombinase under the control of either the mouse mammary tumor virus (MMTV) long terminal repeat (LTR) or the whey acidic protein (WAP) gene promoter. Epithelial-specific loss of IGF-I during pubertal growth resulted in deficits in ductal branching. In contrast, heterozygous reduction of IGF-I throughout the gland decreased expression of cyclins A2 and B1 during pubertal growth and resulted in alterations in proliferation of the alveolar epithelium and in milk protein levels during pregnancy-induced differentiation. Reduction in epithelial IGF-I at either of these stages had no effect on these indices. Taken together, our results support distinct roles for IGF-I expressed in epithelial and stromal compartments in mediating growth of the postnatal mammary gland.