Organ development requires the integration of multiple extracellular signals to assure a proper balance between proliferation and differentiation and to achieve and maintain specialized functions. Considerable progress has been made in the study of hormones and growth factors and in the understanding of the regulated intracellular pathways and transcriptional events which contribute to mammogenesis. Cell culture experiments have pointed out crucial pathways and components which were subsequently validated in vivo experiments. We found that the mTOR pathway is essential for both growth and differentiation of mammary epithelial cells and that the action of mTOR is mediated through the induction of the helix-loop-helix transcriptional regulators Id1 and Id2. Pharmacological inhibition of mTOR activity in HC11 mammary epithelial cells reduced cellular proliferation and prevented the lactogenic hormone-induced expression of milk proteins. Treatment of female mice with rapamycin impaired mammary gland differentiation and milk protein synthesis. The effects of mTOR on proliferation and differentiation require the functions of the helix-loop-helix proteins Id1 and Id2. Rapamycin treatment of HC11 cells resulted in a suppression of Id1 expression and an inhibition of proliferation. This effect of rapamycin was reversed by the forced expression of Id1. Rapamycin also prevented the induction of Id2 by lactogenic hormones and milk protein gene expression. Expression of a Id2 transgene bypassed the requirement of mTOR activity for -casein induction. These data suggest that mTOR activity has distinguishable functions in the proliferative and the differentiated state of mammary epithelial cells: it is a prerequisite for proliferation through the induction of Id1 and for differentiation-specific gene expression through the induction of Id2. The relative strengths of these proliferation and differentiation signals reflected by the expression levels of the individual Id proteins are crucial to the functional life cycle of mammary epithelial cells and might be disturbed in tumorigenesis.