We have shown previously that epimorphin (EPM), a protein expressed on the surface of myoepithelial and fibroblast cells of the mammary gland, acts as a multifunctional morphogen of mammary epithelial cells. Here, we present the molecular mechanism by which EPM mediates luminal morphogenesis. Treatment of cells with EPM to induce lumen formation greatly increases the overall expression of transcription factor CCAAT/enhancer binding protein (C/EBP)β and alters the relative expression of its two principal isoforms, LIP and LAP. These alterations were shown to be essential for the morphogenetic activities, since constitutive expression of LIP was sufficient to produce lumen formation, whereas constitutive expression of LAP blocked EPM-mediated luminal morphogenesis. Furthermore, in a transgenic mouse model in which EPM expression was expressed in an apolar fashion on the surface of mammary epithelial cells, we found increased expression of C/EBPβ, increased relative expression of LIP to LAP, and enlarged ductal lumina. Together, our studies demonstrate a role for EPM in luminal morphogenesis through control of C/EBPβ expression.