Background: The receptor (ER) for estrogen (E2) is routinely assayed as a marker to determine the feasibility of anti-hormone therapy against breast cancer because ER-positive (ER+) tumors are much more likely to respond to anti-hormone therapy than are ER-negative (ER-). However 40% of ER+ breast cancer patients do not respond to anti-hormone therapy. We suggest that this unpredictability of therapeutic responses lies in the current ER assays, which measure only an initial component of the E2-responsive pathway, and that the difference depends upon altered downstream processes. We propose a functional criterion that subclassifies breast cancers on the basis of specific binding of ER to its cognate DNA sequence, the estrogen response element (ERE). Materials and Methods: ER was identified in breast cancer cell lines by immunofluorescence assay, Western blot analysis, identification of ER-specific mRNA, and by interaction of the ER-ERE complex with three different ER-specific antibodies. ER-ERE complex formation was measured by electrophoretic mobility shift assay (EMSA). Transactivation of the E2-responsive gene was studied by transfection of cells with fusion gene construct with the promoter-containing ERE sequence and assay of reporter gene activity in the cell extracts. Results: The growth of ER+ T47D cells was sensitive to tamoxifen, ICI-182,780, and ethynyl estradiol (EE2), whereas another ER+ breast cancer cell line, 21PT, was resistant to these compounds. The estrogen receptor (ER) in the nuclear extracts of MCF-7 and T47D demonstrated hormone-dependent interaction with the response element (ERE) and also downstream transactivation of the E2-responsive PS2 promoter. But in the 21PT cell line that was designated as ER- on the basis of ligand-binding assay and was found to be ER+ by all the other ER assays, ER-ERE interaction and PS2 promoter transactivation were independent of hormone. Conclusions: On the basis of the downstream functional assay of ER interaction with ERE, ER+ breast tumor cells can be subclassified into two categories. The first is E2-dependent (ERd+) and these cells should respond to anti-hormone therapy. The second type of ER interacts with ERE independent of E2 (ERi+) and constitutively transactivates responsive genes. It is predicted that the latter type of breast cancers will not respond to antihormone therapy.