Recent studies have unequivocally identified multipotent stem/progenitor cells in mammary glands, offering a tractable model system to unravel genetic and epigenetic regulation of epithelial stem/progenitor cell development and homeostasis. In this study, we show that Pygo2, a member of an evolutionarily conserved family of plant homeo domain-containing proteins, is expressed in embryonic and postnatal mammary progenitor cells. Pygo2 deficiency, which is achieved by complete or epithelia-specific gene ablation in mice, results in defective mammary morphogenesis and regeneration accompanied by severely compromised expansive self-renewal of epithelial progenitor cells. Pygo2 converges with Wnt/beta-catenin signaling on progenitor cell regulation and cell cycle gene expression, and loss of epithelial Pygo2 completely rescues beta-catenin-induced mammary outgrowth. We further describe a novel molecular function of Pygo2 that is required for mammary progenitor cell expansion, which is to facilitate K4 trimethylation of histone H3, both globally and at Wnt/beta-catenin target loci, via direct binding to K4-methyl histone H3 and recruiting histone H3 K4 methyltransferase complexes.