Prolactin (PRL) initiates signal transduction by inducing homodimerization of PRL receptor (PRL-R). We have previously developed a mutant form of the PRL-R in which a part of the extracellular domain is deleted. This receptor constitutively activates protein gene transcription. We examined the oligomerization of the mutant PRL-R using two differently epitope-tagged receptors in a coimmunoprecipitation assay. It was shown that mutant receptor dimers were formed in a ligand-independent manner, which may explain the constitutive activity on milk protein gene expression. To study the biological activity of this mutant PRL-R on mammary gland development, we generated two lines of transgenic mice expressing the corresponding cDNA specifically in the mammary epithelial cells. For both transgenic lines, the mammary gland of 8-wk-old virgin mice was overdeveloped with numerous dilated ductal and alveolar structures, whereas only a limited duct network was present in wild-type animals at the same age. During pregnancy, the ducts and alveoli of transgenic mice were more developed than those of control animals. At parturition, the transgenic animals failed to lactate and nourish their offspring, and the involution of the mammary gland was strongly delayed. In conclusion, the expression of a constitutively active PRL-R by transgenesis induces a premature and abnormal mammary development and impairs terminal differentiation and milk production at the end of pregnancy.