Experiments were conducted to redirect mouse Embryonic Stem (ES) cells from a tumorigenic phenotype to a normal mammary epithelial phenotype in vivo. Mixing LacZ-labeled ES cells with normal mouse mammary epithelial cells at ratios of 1:5 and 1:50 in phosphate buffered saline and immediately inoculating them into epithelium-divested mammary fat pads of immune-compromised mice accomplished this. Our results indicate that tumorigenesis occurs only when normal mammary ductal growth is not achieved in the inoculated fat pads. When normal mammary gland growth occurs, we find ES cells (LacZ+) progeny interspersed with normal mammary cell progeny in the mammary epithelial structures. We demonstrate that these progeny, marked by LacZ expression, differentiate into multiple epithelial subtypes including steroid receptor positive luminal cells and myoepithelial cells indicating that the ES cells are capable of epithelial multipotency in this context but do not form teratomas. In addition, in secondary transplants, ES cell progeny proliferate, contribute apparently normal mammary progeny, maintain their multipotency and do not produce teratomas