Elevated circulating estrogen levels are associated with increased risk of breast cancer in obese postmenopausal women. Following menopause, the biosynthesis of estrogens through CYP19 (aromatase)-mediated metabolism of androgen precursors occurs primarily in adipose tissue, and the resulting estrogens are then secreted into the systemic circulation. The potential links between obesity, inflammation, and aromatase expression are unknown. In both dietary and genetic models of obesity, we observed necrotic adipocytes surrounded by macrophages forming crown-like structures (CLS) in the mammary glands and visceral fat. The presence of CLS was associated with activation of NF-κB and increased levels of proinflammatory mediators (TNF-α, IL-1β, Cox-2), which were paralleled by elevated levels of aromatase expression and activity in the mammary gland and visceral fat of obese mice. Analyses of the stromal-vascular and adipocyte fractions of the mammary gland suggested that macrophage-derived proinflammatory mediators induced aromatase and estrogen-dependent gene expression (PR, pS2) in adipocytes. Saturated fatty acids, which have been linked to obesity-related inflammation, stimulated NF-κB activity in macrophages leading to increased levels of TNF-α, IL-1β, and Cox-2, each of which contributed to the induction of aromatase in preadipocytes. The discovery of the obesity → inflammation → aromatase axis in the mammary gland and visceral fat and its association with CLS may provide insight into mechanisms underlying the increased risk of hormone receptor-positive breast cancer in obese postmenopausal women, the reduced efficacy of aromatase inhibitors in the treatment of breast cancer in these women, and their generally worse outcomes. The presence of CLS may be a biomarker of increased breast cancer risk or poor prognosis.