Patched-1 (Ptch1) has epithelial, stromal, and systemic roles in murine mammary gland organogenesis, yet specific functions remain undefined. Cre-recombinase-mediated Ptch1 ablation in mammary epithelium increased proliferation and branching, but did not phenocopy transgenic expression of activated Smoothened (SmoM2). Epithelium showed no evidence of canonical hedgehog signaling, and hyperproliferation was not blocked by SMO inhibition, suggesting a non-canonical function of PTCH1. Consistent with this possibility, nuclear localization of Cyclin B1 was increased. In non-epithelial cells, heterozygous Fsp-Cre-mediated Ptch1 ablation increased proliferation and branching, with dysplastic terminal end buds (TEB) and ducts. In contrast, homozygous Ptch1 ablation decreased proliferation and branching, producing stunted ducts filled with luminal cells showing altered ovarian hormone receptor expression. Whole gland transplantation into wild-type hosts, or estrogen/progesterone treatment rescued outgrowth and hormone receptor expression, but not histology. Bone marrow transplantation failed to rescue outgrowth. Ducts of Fsp-Cre;Ptch1fl/fl mice were similar to Fsp-Cre;SmoM2 ducts, but Fsp-Cre;SmoM2 outgrowths were not stunted, suggesting that the histology may be mediated by Smo in the local stroma, with systemic Ptch1 required for ductal outgrowth and proper hormone receptor expression in mammary epithelium.