In breast cancer, a dense layer of undifferentiated fibroblasts is formed around malignant breast epithelial cells and referred to as desmoplastic reaction. These cells provide structural and functional support for tumor growth. Aromatase, the key enzyme in the biosynthesis of estrogen, is overexpressed in these undifferentiated fibroblasts, producing large quantities of estrogen, which in turn influences the growth and progression of malignant epithelial cells. We previously demonstrated that malignant epithelial cells produce large amounts of TNFalpha, which inhibit the differentiation of breast fibroblasts. TNF action is mediated by its two receptors (TNFRs), TNFR1, which mediates inhibition of adipocyte differentiation, and TNFR2, which was linked to the proliferation of thymocytes. We present evidence here that estrogen modulates the synthesis of receptors for TNF in human adipose fibroblasts (HAFs) from breast tissue in a paracrine fashion, which may serve as a mechanism for the inhibition of adipocyte differentiation in breast cancer. Estradiol (E(2)) treatment increased TNFR1 mRNA and protein levels in primary HAFs in a dose- and time-dependent manner, which could be reversed by the estrogen antagonist ICI182,780. Interestingly, higher concentration of E(2) inhibited whereas lower concentrations stimulated TNFR2 mRNA levels in HAFs. To investigate the specific roles of TNFRs in adipocyte differentiation, we incubated breast HAFs with receptor selective muteins of TNF. TNFR1-selective mutein decreased mRNA levels of aP2, a marker for adipogenic differentiation. This antiadipogenic effect was enhanced by cotreatment with E(2). We conclude that high levels of estrogen found in breast tumors promote the antiadipogenic action of TNF on breast adipose fibroblasts by selectively up-regulating TNFR1, which may be a critical mechanism for desmoplastic reaction.