The ability of the rat corpus luteum to respond to estrogen requires prolactin (PRL), which can stimulate the expression of the estrogen receptor (ER). This review will focus on the signaling mechanisms by which this occurs. Transcription of the genes encoding both ERalpha (Esr1) and ERbeta (Esr2) is stimulated by PRL through the Jak2-Stat5 pathway and Stat5-response elements that are located in each of the Esr promoters. A single nucleotide difference between these two response elements is responsible for the observation that either Stat5a or Stat5b can stimulate Esr1 transcription, whereas only Stat5b can activate transcription of Esr2. The tyrosine kinase Jak2 is required for PRL activation of Esr1 promoter activity; however, additional pathways are involved in PRL-induced Stat5b phosphorylation, nuclear translocation and DNA binding. In addition to the corpus luteum, PRL-induced ER expression might provide a mechanism for fine-tuning the responsiveness of other target tissues, such as the decidua and mammary gland, to these two hormones.