Tumor-initiating cells (TICs) share features and regulatory pathways with normal stem cells, yet how the stem cell niche contributes to tumorigenesis remains unclear. Here, we identify CXCR4 macrophages as a niche population enriched in normal mammary ducts, where they promote the regenerative activity of basal cells in response to luminal cell-derived CXCL12. CXCL12 triggers AKT-mediated stabilization of β-catenin, which induces Wnt ligands and pro-migratory genes, enabling intraductal macrophage infiltration and supporting regenerative activity of basal cells. Notably, these same CXCR4 niche macrophages regulate the tumor-initiating activity of various breast cancer subtypes by enhancing TIC survival and tumor-forming capacity, while promoting early immune evasion through regulatory T cell induction. Furthermore, a CXCR4 niche macrophage gene signature correlates with poor prognosis in human breast cancer. These findings highlight the pivotal role of the CXCL12-CXCR4 axis in orchestrating interactions between niche macrophages, mammary epithelial cells, and immune cells, thereby establishing a supportive niche for both normal tissue regeneration and mammary tumor initiation.