Mammary gland development involves complex cycles of proliferation, differentiation, and morphogenesis, regulated by hormones including estrogens, prolactin (PRL), and epidermal growth factor (EGF). The mouse mammary epithelial cell line HC11 has been shown to be valuable for investigations of differentiation of mammary gland. In this study, we show that HC11 cells express estrogen receptor (ER)alpha and ER beta proteins at all developmental stages. We have established two different stable HC11 cell lines; H-estrogen response element (ERE) containing an ERE-reporter and H-Bc containing a beta-casein reporter. Transcription of the ERE-reporter was activated only in proliferating cells in the presence of EGF. When the cells entered the differentiation program, in the absence of EGF, estradiol-induced transcription of the ERE reporter was repressed, and similar results were obtained when MAPK signaling was inhibited in proliferating cells. We propose that these findings are related to changes in ER corepressor levels, regulated by EGF. We also report that the beta-casein reporter was activated in terminally differentiated cells and that this induction was effectively repressed by estradiol treatment. Finally, we show a physical interaction between endogenous ER alpha and signal transducer and activator of transcription 5 in differentiated HC11 cells. In summary, our results show that ER functional activity changes during differentiation of HC11 cells.