We identified a somatic mutation in estrogen receptor-alpha (ERalpha) in breast cancer causing a lysine to arginine transition (K303R) resulting in hypersensitivity to estrogen, altered associations with coactivators and corepressors and altered posttranslational modifications of ERalpha. We have developed a transgenic mouse expressing the K303R mutant ERalpha under control of the mouse mammary tumor virus (MMTV) promoter. At 4 months of age, K303R ERalpha transgenic animals demonstrate precocious alveolar budding compared with wild-type ERalpha transgenic mice or nontransgenic littermates. Despite these morphologic differences, K303R ERalpha transgenic mice displayed no differences in levels of ERalpha, progesterone receptor or proliferation at this time-point. Pregnancy or chronic estrogen plus progesterone exposure in K303R ERalpha transgenic mice also resulted in significantly more alveolar budding, increased beta-casein production and dilated ducts when compared with nontransgenic littermates. To examine the effects of mutant expression on tumorigenesis, mutant ERalpha mice were crossed with FVB-MMTVneu mice and significantly delayed time to neu-mediated tumorigenesis in bigenic animals. In contrast, mutant expression did not affect carcinogen-induced tumorigenesis. Collectively, these data demonstrate that aberrant estrogenic signaling through the K303R ERalpha mutation may lead to precocious alveolar budding in virgin mice, and to an expedited maturation and differentiation phenotype in the mammary glands of hormonally stimulated animals.