The fatty acid-binding protein FABP5 shuttles ligands from the cytosol to the nuclear receptor PPARb/d (encoded for by Ppard), thereby enhancing the transcriptional activity of the receptor. This FABP5/PPARd pathway is critical for induction of proliferation of breast carcinoma cells by activated epidermal growth factor receptor (EGFR). In this study, we show that FABP5 is highly upregulated in human breast cancers and we provide genetic evidence of the pathophysiologic significance of FABP5 in mammary tumorigenesis. Ectopic expression of FABP5 was found to be oncogenic in 3T3 fibroblasts where it augmented the ability of PPARd to enhance cell proliferation, migration, and invasion. To determine whether FABP5 is essential for EGFR-induced mammary tumor growth, we interbred FABP5-null mice with MMTV-ErbB2/HER2 oncomice, which spontaneously develop mammary tumors. FABP5 ablation relieved activation of EGFR downstream effector signals, decreased expression of PPARd target genes that drive cell proliferation, and suppressed mammary tumor development. Our findings establish that FABP5 is critical for mammary tumor development, rationalizing the development of FABP5 inhibitors as novel anticarcinogenic drugs.