Previous studies reported that the Tumor Susceptibility Gene 101 (TSG101) is upregulated in selected human malignancies, and the expression of exogenous Tsg101 was suggested to transform immortalized fibroblasts in culture. To date, the potential oncogenic properties of Tsg101 have not been examined in vivo owing to the lack of appropriate model systems. In this study, we show that Tsg101 is highly expressed in a subset of invasive human breast cancers. Based on this observation, we generated the first transgenic mouse model with a targeted overexpression of Tsg101 in the developing mammary gland to test whether exogenous Tsg101 is capable of initiating tumorigenesis. Normal functionality of exogenous Tsg101 was tested by rescuing the survival of Tsg101-deficient mammary epithelial cells in conditional knockout mice. The overexpression of Tsg101 resulted in increased phosphorylation of the epidermal growth factor receptor and downstream activation of MAP kinases. Despite an increase in the activation of these signal transducers, the mammary gland of females expressing exogenous Tsg101 developed normally throughout the reproductive cycle. In aging females, the overexpression of Tsg101 seemed to increase the susceptibility of mammary epithelia toward malignant transformation. However, owing to the long latency of tumor formation and the sporadic occurrence of bona fide mammary cancers, we conclude that the Tsg101 protein has only weak oncogenic properties. Instead of cancer initiation, it is therefore likely that Tsg101 plays a more predominant role in the progression of a subset of spontaneously arising breast cancers.