Both prolactin (PRL) and estrogen (E2) are involved in the pathogenesis and progression of mammary neoplasia, but the mechanisms by which these hormones interact to exert their effects in breast cancer cells are not well understood. We show here that PRL is able to activate the unliganded estrogen receptor (ER). In breast cancer cells, PRL activates a reporter plasmid containing estrogen response elements (EREs) and induces the ER target gene pS2. These actions are blocked by the antagonist ICI 182,780, showing that ER is required for the PRL-mediated effect. Moreover, PRL leads to phosphorylation of ERalpha in serine-118 (P-ERalpha), a modification related to the potentiation of ligand-independent transcriptional activation. In addition, PRL mimics the effect of E2 on target gene expression by inducing cyclical recruitment of ERalpha and P-ERalpha to ERE-containing promoters, resulting in recruitment of co-activators and acetylation of histone H3. Finally, PRL induces expression of c-Myc and Cyclin D1 and leads to increased cell proliferation, which is specifically antagonized by ICI 182,780 or ERalpha depletion. These results show that ligand-independent ERalpha activation appears to be an important component of the proliferative and transcriptional actions of PRL in breast cancer cells.