Caveolin-1 (Cav-1) loss-of-function mutations are exclusively associated with estrogen receptor-positive (ER(+)) human breast cancers. To dissect the role of Cav-1 loss-of-function in the pathogenesis of human breast cancers, we used Cav-1(-/-) null mice as a model system. First, we demonstrated that Cav-1(-/-) mammary epithelia overexpress two well-established ER co-activator genes, CAPER and Foxa1, in addition to ER-alpha. Thus, the functional loss of Cav-1 may be sufficient to confer estrogen-hypersensitivity in the mammary gland. To test this hypothesis directly, we subjected Cav-1(-/-) mice to ovariectomy and estrogen supplementation. As predicted, Cav-1(-/-) mammary glands were hyper-responsive to estrogen and developed dysplastic mammary lesions with adjacent stromal angiogenesis that resemble human ductal carcinoma in situ. Based on an extensive biomarker analysis, these Cav-1(-/-) mammary lesions contain cells that are hyperproliferative and stain positively with nucleolar (B23/nucleophosmin) and stem/progenitor cell markers (SPRR1A and beta-catenin). Genome-wide transcriptional profiling identified many estrogen-related genes that were over-expressed in Cav-1(-/-) mammary glands, including CAPER--an ER co-activator gene and putative stem/progenitor cell marker. Analysis of human breast cancer samples revealed that CAPER is overexpressed and undergoes a cytoplasmic-to-nuclear shift during the transition from pre-malignancy to ductal carcinoma in situ. Thus, Cav-1(-/-) null mice are a new preclinical model for studying the molecular paradigm of estrogen hypersensitivity and the development of estrogen-dependent ductal carcinoma in situ lesions.