The IGFs and the IGF type 1 receptor (IGF-1R) are essential mediators of normal mammary gland development in mice. IGF-I and the IGF-1R have demonstrated functions in formation and proliferation of terminal end buds and in ductal outgrowth and branching during puberty. To study the functions of IGF-1R during pregnancy and lactation, we established transgenic mouse lines expressing a human dominant-negative kinase dead IGF-1R (dnhIGF-1R) under the control of the whey acidic protein promoter. We provide evidence that the IGF-1R pathway is necessary for normal epithelial proliferation and alveolar formation during pregnancy. Furthermore, we demonstrate that the whey acidic protein-dnhIGF-1R transgene causes a delay in alveolar differentiation including lipid droplet formation, lumen expansion, and β-casein protein expression. Analysis of IGF-1R signaling pathways showed a decrease in P-IGF-1R and P-Akt resulting from expression of the dnhIGF-1R. We further demonstrate that disruption of the IGF-1R decreases mammary epithelial cell expression of the signaling intermediates insulin receptor substrate (IRS)-1 and IRS-2. No alterations were observed in downstream signaling targets of prolactin and progesterone, suggesting that activation of the IGF-1R may directly regulate expression of IRS-1/2 during alveolar development and differentiation. These data show that IGF-1R signaling is necessary for normal alveolar proliferation and differentiation, in part, through induction of signaling intermediates that mediate alveolar development.