In situ estrogen synthesis by hormone-dependent breast cancers could potentially regulate cellular proliferation through autocrine or paracrine mechanisms. Several biochemical studies have demonstrated activity of the enzyme aromatase, the rate-limiting step for estrogen synthesis, in breast tumor homogenates. Prior immunohistochemical studies in breast neoplasms demonstrated aromatase antibody binding to both stroma and parenchyma, but biochemically measured enzyme activity significantly correlated only with the level of staining in the stromal component. The present study sought to provide more direct evidence of the predominant role for stromal cell aromatase in breast tumor tissue. Accordingly, breast tumor stromal and epithelial cells were examined for aromatase enzyme activity and messenger ribonucleic acid (mRNA) expression. Stromal and epithelial cells from benign tissue served as a means of comparing activity and regulation in benign and tumor tissue. Enzyme activity in stromal cells from breast tumor tissue was low basally, but increased by 30- to 1200-fold when induced by dexamethasone. Combining dexamethasone with phorbol esters and cAMP produced an additional 1.2- to 4.1-fold stimulation. Analyses of exons III/V and exons IX/X demonstrated that aromatase mRNA expression was also substantially increased by these treatments. Increases in enzyme activity and mRNA expression in cells from benign breast stroma paralleled those observed in tumor stroma, although the increases in enzyme activity were generally lower. In contrast to the responses observed in stromal cells, epithelial cells from breast tumor or nonmalignant breast tissue were unresponsive to dexamethasone, either added alone or in combination with phorbol esters and cAMP. This study provides direct biochemical evidence that aromatase is present in stroma within breast tumors, as in surrounding tissues, and suggests that estrogen synthesis within the tumor may modulate tumor growth via a paracrine mechanism.