The process of organ development requires a delicate balance between cellular plasticity and differentiation. This balance is disrupted in cancer initiation and progression. N-Myc and STAT interactor (NMI: human or Nmi: murine) has emerged as a relevant player in the etiology of breast cancer. However, a fundamental understanding of its relevance to normal mammary biology is lacking. To gain insight into its normal function in mammary gland, we generated a mammary-specific Nmi knockout mouse model. We observed that Nmi protein expression is induced in mammary epithelium at the onset of pregnancy, in luminal cells and persists throughout lactation. Nmi knockout results in a precocious alveolar phenotype. These alveoli exhibit an extensive presence of nuclear β-catenin and enhanced Wnt/β-catenin signaling. The Nmi knockout pubertal ductal tree shows enhanced invasion of the mammary fatpad and increased terminal end bud numbers. Tumors from Nmi null mammary epithelium show a significant enrichment of poorly differentiated cells with elevated stem/progenitor markers, active Wnt/β-catenin signaling, highly invasive morphology as well as, increased number of distant metastases. Our study demonstrates that Nmi has a distinct role in the differentiation process of mammary luminal epithelial cell compartment and developmental aberrations resulting from Nmi absence contribute to metastasis and demonstrates that aberration in normal developmental program can lead to metastatic disease, highlighting the contribution and importance of luminal progenitor cells in driving metastatic disease.