Identification of differentially expressed subnetworks from protein-protein interaction (PPI) networks has become increasingly important to our global understanding of the molecular mechanisms that drive cancer. Several methods have been proposed for PPI subnetwork identification, but the dependency among network member genes is not explicitly considered, leaving many important hub genes largely unidentified. We present a new method, based on a bagging Markov random field (BMRF) framework, to improve subnetwork identification for mechanistic studies of breast cancer. The method follows a maximum a posteriori principle to form a novel network score that explicitly considers pairwise gene interactions in PPI networks, and it searches for subnetworks with maximal network scores. To improve their robustness across data sets, a bagging scheme based on bootstrapping samples is implemented to statistically select high confidence subnetworks. We first compared the BMRF-based method with existing methods on simulation data to demonstrate its improved performance. We then applied our method to breast cancer data to identify PPI subnetworks associated with breast cancer progression and/or tamoxifen resistance. The experimental results show that not only an improved prediction performance can be achieved by the BMRF approach when tested on independent data sets, but biologically meaningful subnetworks can also be revealed that are relevant to breast cancer and tamoxifen resistance.