Mammary epithelial progenitors are the normal cell-of-origin of breast cancer. We previously defined a population of p27+ quiescent hormone-responsive progenitor cells in the normal human breast whose frequency associates with breast cancer risk. Here, we describe that deletion of the Cdkn1b gene encoding the p27 cyclin-dependent kinase inhibitor in the estrogen-induced mammary tumor-susceptible ACI rat strain leads to a decrease in the relative frequencies of Cd49b+ mammary luminal epithelial progenitors and pregnancy-related differentiation. We show by comprehensive gene expression profiling of purified progenitor and differentiated mammary epithelial cell populations that p27 deletion has the most pronounced effects on luminal progenitors. Cdkn1b-/- females have decreased fertility, but rats that are able to get pregnant had normal litter size and were able to nurse their pups implying that loss of p27 in ACI rats does not completely abrogate ovarian function and lactation. Reciprocal mammary gland transplantation experiments indicate that the p27-loss-induced changes in mammary epithelial cells are not only caused by alterations in their intrinsic properties, but are likely due to altered hormonal signaling triggered by the perturbed systemic endocrine environment observed in Cdkn1b-/- females. We also observed a decrease in the frequency of mammary epithelial cells positive for progesterone receptor (Pr) and FoxA1, known direct transcriptional targets of the estrogen receptor (Erα), and an increase in phospho-Stat5 positive cells commonly induced by prolactin (Prl). Characterization of genome-wide Pr chromatin binding revealed distinct binding patterns in mammary epithelial cells of Cdkn1b+/+ and Cdkn1b-/- females and enrichment in genes with known roles in Notch, ErbB, leptin, and Erα signaling and regulation of G1-S transition. Our data support a role for p27 in regulating the pool size of hormone-responsive luminal progenitors that could impact breast cancer risk.