Mammary gland development is a complex process that is dependent on interactions between the developing mammary epithelium and the surrounding stromal tissues. We show that mice lacking the triglyceride synthesis enzyme acyl CoA:diacylglycerol transferase 1 (DGAT1) have impaired mammary gland development, characterized by decreased epithelial proliferation and alveolar development, and reduced expression of markers of functional differentiation. Transplantation studies demonstrate that the impaired development results from a deficiency of DGAT1 in both the stromal and epithelial tissues. Our findings are the first to link defects in stromal lipid metabolism to impaired mammary gland development.