Mammary epithelial cells undergo structural and functional differentiation at late pregnancy and parturition to produce and secrete milk. Both TGF-β and prolactin pathways are crucial regulators of this process. However, how the activities of these two antagonistic pathways are orchestrated to initiate lactation has not been well defined. Here, we show that SnoN, a negative regulator of TGF-β signaling, coordinates TGF-β and prolactin signaling to control alveologenesis and lactogenesis. SnoN expression is induced at late pregnancy by the coordinated actions of TGF-β and prolactin. The elevated SnoN promotes Stat5 signaling by enhancing its stability, thereby sharply increasing the activity of prolactin signaling at the onset of lactation. SnoN-/- mice display severe defects in alveologenesis and lactogenesis, and mammary epithelial cells from these mice fail to undergo proper morphogenesis. These defects can be rescued by an active Stat5. Thus, our study has identified a new player in the regulation of milk production and revealed a novel function of SnoN in mammary alveologenesis and lactogenesis in vivo through promotion of Stat5 signaling.