Obese postmenopausal women have an increased risk of breast cancer and are likely to have a worse prognosis than nonobese postmenopausal women. The cessation of ovarian function after menopause results in withdrawal of ovarian sex steroid hormones, estrogen, and progesterone. Accumulating evidence suggests that the withdrawal of estrogen and progesterone causes homeostasis imbalances, including decreases in insulin sensitivity and leptin secretion and changes in glucose and lipid metabolism, resulting in a total reduction in energy expenditure. Together with a decrease in physical activity and consumption of a high fat diet, these factors significantly contribute to obesity in postmenopausal women. Obesity may contribute to breast cancer development through several mechanisms. Obesity causes localized inflammation, an increase in local estrogen production, and changes in cellular metabolism. In addition, obese women have a higher risk of insulin insensitivity, and an increase in insulin and other growth factor secretion. In this review, we describe our current understanding of the molecular actions of estrogen and progesterone and their contributions to cellular metabolism, obesity, inflammation, and postmenopausal breast cancer. We also discuss how modifications of estrogen and progesterone actions might be used as a therapeutic approach for obesity and postmenopausal breast cancer.