Src family kinase activity is elevated in a number of human cancers including breast cancer. This increased activity has been associated with aggressive disease and poor prognosis. Src inhibitors are currently in clinical development with a number of trials currently assessing their activity in breast cancer. However, the results to date have been disappointing and a further evaluation of the preclinical effects of Src inhibitors is required to help establish whether these agents will be useful in the treatment of breast cancer. In this study we investigate the effects of dasatinib, which is a potent inhibitor of Src family kinases, on the initiation and development of breast cancer in a genetically engineered model of the disease. The mouse model utilised is driven by expression of activated ErbB2 under the transcriptional control of its endogenous promoter coupled with conditional loss of Pten under the control of Cre recombinase expressed by the BLG promoter. We show that daily oral administration of dasatinib delays tumour onset and increases overall survival but does not inhibit the proliferation of established tumours. The striking difference between the dasatinib treated group of tumours and the vehicle controls was the prominent squamous metaplasia that was seen in 6 out of 11 dasatinib treated tumours. This was accompanied by a dramatic upregulation of both E-cadherin and β-catenin and down regulation of ErbB2 in the dasatinib treated tumours. Dasatinib also inhibited both the migration and invasion of tumour derived cell lines in vitro. Together these data support the argument that benefits of Src inhibitors may predominate in early or even pre-invasive disease.