We describe the establishment of a continuous, nontransformed cell line obtained from primary culture of a lactating (114 days postparturition) Anglo-Nubian (Capra hircus) goat mammary gland biopsy. These cells (CMEC), have been cultured in the presence of supraphysiologic concentrations of insulin and hydrocortisone for more than 560 population doublings (over 80 passages) without any sign of senescence while maintaining a normal/near-normal diploid chromosome modal number of 2n = 60 and are responsive to contact inhibition of proliferation. Cytoskeletal analysis indicates that CMECs are epithelial, without detectable fibroblastic or myoepithelial cells. When grown at low density on plastic substratum, the cells tend to form island monolayer aggregates with the characteristic cobblestone morphology of epithelial cells. With increasing density, the cells organize into lumen-like structures with various morphology consisting of large and small vacuolized and nonvacuolized cells. Postconfluent cultures form epithelial raised dome-like structures, implying a process of contact-induced differentiation. This is corroborated by positive immunocytochemistry to lactation-specific proteins: beta-casein and alpha-lactalbumin, which were predominantly expressed in dome-forming cells. We also observed an overall modulation of cytokeratin 18/19 expression associated with number of days post subculture and with the expression of lactation-specific proteins. Postconfluent cultures which contain lactation-specific, antibody-reactive, dome-like structures showed a decreased expression of keratin 18 and no (null) expression for keratin 19. Lastly, cells cultured within a collagen matrix show morphological differentiation with the organization of branching duct-like and acini-like structures. This study suggests that CMECs are a useful in vitro model for study of mammary gland development and differentiation, in particular, direct modulation of epithelial cells grown on plastic substratum or extracellular matrix without the influence of stromal elements or the necessity and variability associated with primary cell culture or tissue explants.