Systemic hormones and local growth factor-mediated tissue interactions are essential for mammary gland development. Using phenotypic and transplantation analyses of mice carrying the mesenchymal dysplasia (mes) allele of patched 1 (Ptch1^mes), we found that Ptch1^mes homozygosity led to either complete failure of gland development, failure of post-pubertal ductal elongation, or delayed growth with ductal dysplasia. All ductal phenotypes could be present in the same animal. Whole gland and epithelial fragment transplantation each yielded unique morphological defects indicating both epithelial and stromal functions for Ptch1. However, ductal elongation was rescued in all cases,suggesting an additional systemic function. Epithelial function was confirmed using a conditional null Ptch1 allele via MMTV-Cre-mediated disruption. In Ptch1^mes homozygotes, failure of ductal elongation correlated with diminished estrogen and progesterone receptor expression, but could not be rescued by exogenous ovarian hormone treatment. By contrast,pituitary isografts were able to rescue the ductal elongation phenotype. Thus, Ptch1 functions in the mammary epithelium and stroma to regulate ductal morphogenesis, and in the pituitary to regulate ductal elongation and ovarian hormone responsiveness.