Prolactin exerts diverse functions in target tissues through its membrane receptors, and is a potent mitogen in normal and neoplastic breast cells. Estradiol (E(2)) induces human prolactin receptor (hPRLR) gene expression through stimulation of its generic promoter (PIII). This study identifies a novel E(2)-regulated non-estrogen responsive element-dependent transcriptional mechanism that mediates E(2)-induced hPRLR expression. E(2) stimulated transcriptional activity in MCF7A(2) cells transfected with PIII lacking an estrogen responsive element, and increased hPRLR mRNA and protein. The abolition of the E(2) effect by mutation of Sp1 or C/EBP elements that bind Sp1/Sp3 and C/EBPbeta within PIII indicated the cooperation of these transfactors in E(2)-induced transcription of the hPRLR. DNA affinity protein assay showed that E(2) induced estrogen receptor alpha (ERalpha) binding to Sp1/Sp3 and C/EBPbeta DNA-protein complexes. The ligand-binding domain of ERalpha was essential for its physical interaction with C/EBPbeta, and E(2) promoted this association, and its DNA binding domain was required for transactivation of PIII. Co-immunoprecipitation studies revealed tethering of C/EBPbeta to Sp1 by E(2)-activated ERalpha. Chromatin immunoprecipitation analysis showed that E(2) induced recruitment of C/EBPbeta, ERalpha, SRC1, p300, pCAF, TFIIB, and Pol II, with no change in Sp1/Sp3. E(2) also induced promoter-associated acetylation of H3 and H4. These findings demonstrate that an E(2)/ERalpha, Sp1, and C/EBPbeta complex with recruitment of coactivators and TFIIB and Pol II are required for E(2)-activated transcriptional expression of the hPRLR through PIII. Estradiol produced in breast stroma and adipose tissue, which are major sources of estrogen in post-menopausal women, could up-regulate hPRLR gene expression and stimulate breast tumor growth.