Utilizing the MCF10AT xenograft model for progression of human proliferative breast disease, we detected expression of the endogenous estrogen receptor (ER) gene only in MCF10AneoT and cells of the MCF10AT system, all of which stably express a transfected mutated T24 Ha-ras gene. ER transcripts were undetectable in the parental MCF10A cells and in MCF10A cells transfected with normal c-Ha-ras or vector. ER transcripts expressed in MCF10AT cells contain a normal full-length ER coding region and direct synthesis of a normally sized ER protein. The protein is functional based on its ability to mediate estradiol (E2)-induced increases of transcription from both endogenous and exogenous E2-regulated genes. Transcriptional activation of the endogenous ER gene does not appear to be related to a change in methylation status of the gene since a diagnostic CpG site in exon 1 that is methylated in ER-negative breast tumors and completely unmethylated in ER-positive breast tumors is hypomethylated to the same extent in ER-negative MCF10A cells and ER-positive MCF10AT cells. E2 increased both the number and size of soft-agar colonies formed by MCF10AT3c cells, a line from a third generation MCF10AT xenograft lesion. This suggests that xenograft passage has selected for growth regulatory pathways that are E2-responsive and that identification of these pathways and their role in progression will aid in determining how E2 acts to increase risk of breast cancer.