The key molecular events required for the formation of ductal carcinoma in situ (DCIS) and its progression to invasive breast carcinoma have not been defined. Here, we show that the nuclear receptor coactivator amplified in breast cancer 1 (AIB1) is expressed at low levels in normal breast but is highly expressed in DCIS lesions. This is of significance since reduction of AIB1 in human MCFDCIS cells restored a more normal three-dimensional mammary acinar structure. Reduction of AIB1 in MCFDCIS cells, both before DCIS development or in existing MCFDCIS lesions in vivo, inhibited tumor growth and led to smaller, necrotic lesions. AIB1 reduction in MCFDCIS cells was correlated with significant reduction in the CD24-/CD44+ breast cancer-initiating cell (BCIC) population, and a decrease in myoepithelial progenitor cells in the DCIS lesions in vitro and in vivo. The loss of AIB1 in MCFDCIS cells was also accompanied by a loss of expression of NOTCH 2, 3 and 4, JAG2, HES1, GATA3, human epidermal growth factor receptor 2 (HER2) and HER3 in vivo. These signaling molecules have been associated with differentiation of breast epithelial progenitor cells. These data indicate that AIB1 has a central role in the initiation and maintenance of DCIS and that reduction of AIB1 causes loss of BCIC, loss of components of the NOTCH, HER2 and HER3 signaling pathways and fewer DCIS myoepithelial progenitor cells in vivo. We propose that increased expression of AIB1, through the maintenance of BCIC, facilitates formation of DCIS, a necessary step before development of invasive disease.