Mammary glands, like other skin appendages such as hair follicles and teeth, develop from the surface epithelium and underlying mesenchyme; however, the molecular controls of embryonic mammary development are largely unknown. We find that activation of the canonical WNT/beta-catenin signaling pathway in the embryonic mouse mammary region coincides with initiation of mammary morphogenesis, and that WNT pathway activity subsequently localizes to mammary placodes and buds. Several Wnt genes are broadly expressed in the surface epithelium at the time of mammary initiation, and expression of additional Wnt and WNT pathway genes localizes to the mammary lines and placodes as they develop. Embryos cultured in medium containing WNT3A or the WNT pathway activator lithium chloride (LiCl) display accelerated formation of expanded placodes, and LiCl induces the formation of ectopic placode-like structures that show elevated expression of the placode marker Wnt10b. Conversely, expression of the secreted WNT inhibitor Dickkopf 1 in transgenic embryo surface epithelium in vivo completely blocks mammary placode formation and prevents localized expression of all mammary placode markers tested. These data indicate that WNT signaling promotes placode development and is required for initiation of mammary gland morphogenesis. WNT signals play similar roles in hair follicle formation and thus may be broadly required for induction of skin appendage morphogenesis.