p120 catenin is thought to be a key regulator of E-cadherin function and stability, but its role(s) in vivo is poorly understood. To examine these directly, we generated a conditional p120 knockout mouse and targeted p120 ablation to the embryonic salivary gland. Surprisingly, acinar differentiation is completely blocked, resulting in a gland composed entirely of ducts. Moreover, p120 ablation causes E-cadherin deficiency in vivo and severe defects in adhesion, cell polarity, and epithelial morphology. These changes closely phenocopy high-grade intraepithelial neoplasia, a condition that, in humans, typically progresses to invasive cancer. Tumor-like protrusions appear immediately after p120 ablation at e14 and expand into the lumen until shortly after birth, at which time the animals die with completely occluded glands. The data reveal an unexpected role for p120 in salivary acinar development and show that p120 ablation by itself induces effects consistent with a role in tumor progression.