Collective migration is essential for development, wound repair, and cancer metastasis. For most collective systems, "leader cells" determine both the direction and the power of the migration. It has remained unclear, however, how the highly polarized vertebrate epithelium migrates directionally during branching morphogenesis. We show here that, unlike in other systems, front-rear polarity of the mammary epithelium is set up by preferential cell proliferation in the front in response to the FGF10 gradient. This leads to frontal stratification, loss of apicobasal polarity, and leader cell formation. Leader cells are a dynamic population and move faster and more directionally toward the FGF10 signal than do follower cells, partly because of their intraepithelial protrusions toward the signal. Together, our data show that directional migration of the mammary epithelium is a unique multistep process and that, despite sharing remarkable cellular and molecular similarities, vertebrate and invertebrate epithelial branching are fundamentally distinct processes.