Butyrophilin 1a1 (BTN) and xanthine oxidoreductase (XOR) are expressed in the lactating mammary gland and are secreted into milk in association with lipid droplets. Disruption of either the BTN or XOR gene in mice causes the accumulation of large pools of lipid in the cytoplasm, thus suggesting that both proteins may function in the accretion and/or secretion of milk-lipid droplets during lactation. Therefore, we investigated the potential functions of BTN and XOR in the lactating mammary gland of mice by molecular and cell biological approaches. The cytoplasmic domain of BTN bound to XOR in vitro and in vivo with relative high affinity, through the B30.2 domain with a 1:1 binding ratio (one XOR dimer to two BTN monomers). BTN bound to XOR via the N-terminal Fe2S2 clusters and FAD domain. BTN/XOR complexes were concentrated in the apical plasma membrane, but XOR was a soluble cytoplasmic protein in the absence of BTN in Btn1a1-/- mice. Furthermore, knock-out of BTN gene expression led to the accumulation of XOR protein and mRNA, thus indicating that BTN negatively regulates the amount of XOR in cells. Over-expression of the B30.2 domain as a soluble protein induced a similar phenotype as that of Btn1a1-/- mice, suggesting that the B30.2 domain acts in a dominant negative manner to inhibit binding of BTN to XOR in vivo. Based on these data, we postulate that BTN/XOR complexes may function in milk-lipid droplet secretion by acting as a structural scaffold protein.