Disruption of epithelial organization and loss of growth control are universal features of carcinomas, yet how these features are linked during cancer progression remains poorly understood. Cell polarity proteins control cellular and tissue organization and are emerging as important mediators of cancer progression. The Par3 polarity protein is a molecular scaffold that functions to recruit and spatially organize signaling factors, and was recently identified as a suppressor of breast cancer invasion and metastasis. Here, we show that loss of Par3 in mammary epithelial cells promotes apoptosis, and that oncogenic Notch overcomes the apoptotic signal to reveal an unexpected pro-proliferative role for loss of Par3 in mammary tumors. In this context, loss of Par3 deregulates Rac1 activity to activate Jun N-terminal Kinase-dependent proliferation and tumor growth. Thus, we demonstrate a mechanism by which loss of Par3 promotes proliferation and tumorigenesis, which supports a tumor-suppressive function for Par3 in the mammary epithelium.