Female BRCA1 mutation carriers have a nearly 80% probability of developing breast cancer during their life-time. We hypothesized that the breast epithelium at risk in BRCA1 mutation carriers harbors mammary epithelial cells (MEC) with altered proliferation and differentiation properties. Using a three-dimensional culture technique to grow MECs ex vivo, we found that the ability to form colonies, an indication of clonality, was restricted to the aldehyde dehydrogenase 1–positive fraction in MECs but not in HCC1937 BRCA1-mutant cancer cells. Primary MECs from BRCA1 mutation carriers (n = 9) had a 28% greater ability for clonal growth compared with normal controls (n = 6; P = 0.006), and their colonies were significantly larger. Colonies in controls and BRCA1 mutation carriers stained positive for BRCA1 by immunohistochemistry, and 79% of the examined single colonies from BRCA1 carriers retained heterozygosity for BRCA1 (ROH). Colonies from BRCA1 mutation carriers frequently showed high epidermal growth factor receptor (EGFR) expression (71% EGFR positive versus 44% in controls) and were negative for estrogen receptor (ERα; 32% ER negative, 44% mixed, 24% ER positive versus 90% ER positive in controls). Expression of CK14 and p63 were not significantly different. Microarray studies revealed that colonies from BRCA1-mutant PMECs anticipate expression profiles found in BRCA1-related tumors, and that the EGFR pathway is up-regulated. We conclude that BRCA1 haploinsufficiency leads to an increased ability for clonal growth and proliferation in the PMECs of BRCA1 mutation carriers, possibly as a result of EGFR pathway activation. These altered growth and differentiation properties may render BRCA1-mutant PMECs vulnerable to transformation and predispose to the development of ER-negative, EGFR-positive breast cancers. [Cancer Res 2009;69(4):1273–8]