The major components of the mammary ductal tree are an inner layer of luminal cells, an outer layer of myoepithelial cells, and a basement membrane that separates the ducts from the underlying stroma. Cells in the outer layer express CD10, a zinc-dependent metalloprotease that regulates the growth of the ductal tree during mammary gland development. To define the steps in the human mammary lineage at which CD10 acts, we have developed an in vitro assay for human mammary lineage progression. We show that sorting for CD10 and EpCAM cleanly separates progenitors from differentiated luminal cells and that the CD10-high EpCAM-low population is enriched for early common progenitor and mammosphere-forming cells. We also show that sorting for CD10 enriches sphere-forming cells from other tissue types, suggesting that it may provide a simple tool to identify stem or progenitor populations in tissues for which lineage studies are not currently possible. We demonstrate that the protease activity of CD10 and the adhesion function of beta1-integrin are required to prevent differentiation of mammary progenitors. Taken together, our data suggest that integrin-mediated contact with the basement membrane and cleavage of signaling factors by CD10 are key elements in the niche that maintains the progenitor and stem cell pools in the mammary lineage.