Although several lines of epidemiological evidence suggest that estrogen exposure influences the incidence of breast cancer development, the mechanisms by which estrogen may stimulate the formation of breast cancer remain poorly understood. We have explored how alterations in estrogen exposure can influence the development of mammary cancer in the C3(1)/T_AG transgenic model, where estrogen levels and estrogen receptor α (ERα) expression do not appear to modify the level of transgene expression. The C3(1)/T_AG transgene becomes transcriptionally active in mammary ductal target cells at 3 weeks of age after the estrogen-induced differentiation of the mammary epithelial anlage to the ductal outgrowth stage. Complete maturation of the mammary ductal tree, however, is not required for cancer development because tumors arise in animals where ductal branching and terminal end bud formation have been prematurely arrested by ovariectomy. Mammary tumorigenesis in this model is promoted by increased estrogen exposure with the development of significantly more mammary intraepithelial neoplastic lesions and carcinomas associated with accelerated malignant conversion. The promotion of mammary tumors in this model appears to occur through an estrogen-induced proliferation and increase in the number of available target cells for transformation at the terminal ductal lobular units, as has been postulated to occur in women who receive hormone replacement therapy and/or by additional molecular mechanisms. We show, for the first time in a transgenic mouse model, that mammary tumor progression is associated with the loss of ERα expression, as has been often observed in human breast cancers with important clinical significance. Estrogen signaling may, therefore, serve different functions, depending upon the stage of tumorigenesis. ERβ expression is up-regulated during tumor progression, although the functional significance of this remains to be determined.