Male mice lack mammary glands due to the interaction of circulating androgens with local epithelial-mesenchymal signaling in the developing mammary bud. Mammary epithelial cells induce androgen receptor (AR) within the mammary mesenchyme and, in response to androgens, the mesenchyme condenses around the epithelial bud, destroying it. We show that this process involves apoptosis and that, in the absence of parathyroid hormone-related protein (PTHrP) or its receptor, the PTH/PTHrP receptor (PPR1), it fails due to a lack of mesenchymal AR expression. In addition, the expression of tenascin C, another marker of the mammary mesenchyme, is also dependent on PTHrP. PTHrP expression is initiated on E11 and, within the ventral epidermis, is restricted to the forming mammary epithelial bud. In contrast, PPR1 expression is not limited to the mammary bud, but is found generally within the subepidermal mesenchyme. Finally, transgenic overexpression of PTHrP within the basal epidermis induces AR and tenasin C expression within the ventral dermis, suggesting that ectopic expression of PTHrP can induce the ventral mesenchyme to express mammary mesenchyme markers. We propose that PTHrP expression specifically within the developing epithelial bud acts as a dominant signal participating in cell fate decisions leading to a specialized mammary mesenchyme.