We have used MCF-7, the human breast cancer cell line, which is estrogen receptor-positive, and the HeLa cell line, which is estrogen receptor-negative, to study the mechanisms by which estrogen induces prolactin gene transcription. A series of plasmids were constructed which direct the expression of the easily assayed bacterial enzyme chloramphenicol acetyltransferase. We have used these recombinants to show that the estrogen-responsive DNA element (ERE) required for the estrogenic regulation of the rat prolactin gene is functional in MCF-7 cells but not in HeLa cells. Specifically, in MCF-7 cells this element enhances the level of gene activity after estrogen treatment both from its own promoter and from a heterologous (simian virus 40) promoter. Results of these studies also show that in HeLa cells the ERE can mediate estrogenic regulation if cotransfected with a plasmid that can synthesize estrogen receptor.