Breast cancer is the most common malignancy in women continuing to rise worldwide. Breast cancer emerges through a multi-step process, encompassing progressive changes from a normal cell to hyperplasia (with and without atypia), carcinoma in situ, invasive carcinoma, and metastasis. In the current study, we analyzed the morphological changes and alterations of DNA methylation, histone methylation and microRNA expression during estradiol-17beta (E(2))-induced mammary carcinogenesis in female August Copenhagen Irish (ACI) rats. E(2)-induced breast carcinogenesis in ACI rats provides a physiologically relevant and genetically defined animal model for studying human sporadic breast cancer. The pattern of morphological changes in mammary glands during E(2)-induced carcinogenesis was characterized by transition from normal appearing alveolar and ductular hyperplasia to focal hyperplastic areas of atypical glands and ducts accompanied by a rapid and sustained loss of global DNA methylation, LINE-1 hypomethylation, loss of histone H3 lysine 9 and histone H4 lysine 20 trimethylation, and altered microRNAs expression. More importantly, these alterations in the mammary tissue occurred after six weeks of E(2)-treatment, whereas the atypical hyperplasia, which represents a putative precursor lesion to mammary carcinoma in this model, was detected only after twelve weeks of exposure, demonstrating clearly that these events are directly associated with the effects of E(2) and are not a consequence of the preexisting preneoplastic lesions. The results of this study show that deregulation of cellular epigenetic processes plays a crucial role in the mechanism of E(2)-induced mammary carcinogenesis in ACI rats, especially in the tumor initiation process.