Estrogen regulates proliferation and morphogenesis of mammary ductal epithelium by interacting with a specific intracellular estrogen receptor (ER) that acts as a hormone-dependent transcriptional regulator of gene expression. The mechanisms by which ER regulates transcription in response to estrogen have been analyzed extensively in tissue culture and in cell-free systems. These studies have demonstrated that the transcriptional activity of ER is strongly influenced by cellular context and highlight the need to address ER transcriptional activity in an appropriate cellular background. Thus, to gain insight into the mechanistic role of ER in mammary epithelial morphogenesis, we have used an adenoviral gene delivery strategy to introduce an estrogen-responsive reporter gene into the mammary epithelium and to monitor the activity of endogenous ERs in their natural environment where cellular context including stromal-epithelial interactions can be taken into account. Using this approach, we first demonstrated highly efficient adenoviral delivery throughout the mammary epithelium using a beta-galactosidase (betagal) reporter gene under the control of the constitutively active cytomegalovirus (CMV) promoter. Next, we constructed an adenoviral vector by substituting the CMV promoter with an estrogen-dependent promoter fragment-linked betagal (Ad-ERE-tk-betagal). This adenoviral reporter system provides evidence that ER positive mammary epithelial cells display a differential sensitivity in a region-specific manner toward estrogen induction. Our data suggest that the availability of factor(s) other than ER is necessary for ER-mediated gene activation and may be important in modulating the differential responses of mammary epithelial cells to estrogen.