Two types of human breast epithelial cells (HBEC) have been characterized. In contrast to Type II HBEC, which express basal epithelial cell phenotypes, Type I HBEC are deficient in gap junctional intercellular communication and are capable of anchorage-independent growth and of expressing luminal epithelial cell markers, estrogen receptors, and stem cell characteristics (i.e. the ability to differentiate into other cell types and to form budding/ductal organoids on Matrigel). A comparative study of these two types of cells has revealed a high susceptibility of Type I HBEC to immortalization by SV40 large T antigen, although both types of cells are equally capable of acquiring an extended life span (bypassing senescence) after transfection with SV40. The immortalization was accompanied by elevation of a low level of telomerase activity in the parental cells after mid-passage ( approximately 60 cumulative population doubling levels). Thus HBEC do have a low level of telomerase activity, and Type I HBEC with stem cell characteristics are more susceptible to telomerase activation and immortalization, a mechanism which might qualify them as target cells for breast carcinogenesis. The immortalized Type I HBEC can be converted to highly tumorigenic cells by further treatment with X rays (2 Gy x 2) and transfection with a mutated ERBB2 (also known as NEU) oncogene, resulting in the expression of p185(ERBB2) which is tyrosine phosphorylated.