Abstract Introduction Parity-identified mammary epithelial cells (PI-MECs) are an interesting cellular subset because they survive involution and are a presumptive target for transformation by human epidermal growth factor receptor 2 (HER2)/neu in mammary tumors. Depending on the type of assay, PI-MECs have been designated lobule-restricted progenitors or multipotent stem/progenitor cells. PI-MECs were reported to be part of the basal population of mammary epithelium based on flow cytometry. We investigated the cellular identity and lineage potential of PI-MECs in intact mammary glands. Methods We performed a quantitative and qualitative analysis of the contribution of PI-MECs to mammary epithelial cell lineages in pregnant and involuted mammary glands by immunohistochemistry, fluorescence-activated cells sorting (FACS), and quantitative polymerase chain reaction. PI-MECs were labeled by the activation of Whey Acidic Protein (WAP)-Cre during pregnancy that results in permanent expression of yellow fluorescent protein. Results After involution, PI-MECs are present exclusively in the luminal layer of mammary ducts. During pregnancy, PI-MECs contribute to the luminal layer but not the basal layer of alveolar lobules. Strikingly, whereas all luminal estrogen receptor (ER)-negative cells in an alveolus can be derived from PI-MECs, the alveolar ER-positive cells are unlabeled and reminiscent of Notch2-traced L cells. Notably, we observed a significant population of unlabeled alveolar progenitors that resemble PI-MECs based on transcriptional and histological analysis. Conclusions Our demonstration that PI-MECs are luminal cells underscores that not only basal cells display multi-lineage potential in transplantation assays. However, the lineage potential of PI-MECs in unperturbed mammary glands is remarkably restricted to luminal ER-negative cells of the secretory alveolar lineage. The identification of an unlabeled but functionally similar population of luminal alveolar progenitor cells raises the question of whether PI-MECs are a unique population or the result of stochastic labeling. Interestingly, even when all luminal ER-negative cells of an alveolus are PI-MEC-derived, the basal cells and hormone-sensing cells are derived from a different source, indicating that cooperative outgrowth of cells from different lineages is common in alveologenesis.