Postnatally, the mammary gland undergoes continuous morphogenesis and thereby is especially prone to malignant transformation. Thus, the maintenance of the epithelium depends on a tight control of stem cell recruitment. We have previously shown that epithelial overexpression of the EphB4 receptor results in defective mammary epithelial development and conferred a metastasizing tumor phenotype on experimental mouse mammary tumors accompanied by a preponderance of progenitor cells. To analyze the effect of EphB4 overexpression on mammary epithelial cell fate, we have used Fluorescence Activated Cell Sorting (FACS) analyses to quantify epithelial sub‐populations and repopulation assays of cleared fat pads to investigate their regenerative potential. These experiments revealed that deregulated EphB4 expression leads to an augmentation of bi‐potent progenitor cells and to a shift of the differentiation pathway towards the luminal lineage. The analyses of the ductal outgrowths indicated that EphB4 overexpression leads to enforced branching activity, impedes ductal differentiation and stimulates angiogenesis. To elucidate the mechanisms forwarding EphB4 signals, we have compared the expression profile of defined cell populations between EphB4 transgene and wild type mammary glands concentrating on the wnt signaling pathway and on genes implicated in cell migration. With respect to wnt signaling, the progenitor cell population was the most affected, whereas the stem cell‐enriched population showed the most pronounced deregulation of migration‐associated genes. Thus, the luminal epithelial EphB4 signaling contributes, most likely via wnt signaling, to the regulation of migration and cell fate of early progenitors and is involved in the determination of branching points along the ductal tree.