Estrogen receptor (ER)-mediated gene expression plays an essential role in mammary gland morphogenesis, function, and carcinogenesis. The repressor of ER activity (REA) is an ER-interactive protein that counterbalances estrogen-induced ER transcriptional activity. Our previous study showed that genetic deletion of both REA alleles resulted in embryonic lethality. This study demonstrates that REA and ERalpha are coexpressed in mammary epithelial cells. REA heterozygous (REA(+/-)) mutant mice exhibit faster mammary ductal elongation in virgin animals, increased lobuloalveolar development during pregnancy, and delayed mammary gland involution after weaning. These morphological phenotypes of REA(+/-) mice are associated with significantly increased cell proliferation and ER transcriptional activities, as indicated by the estrogen response element (ERE)-luciferase reporter in the WT/ERE-Luc and REA(+/-)/ERE-Luc bigenic mice and by the higher expression levels of estrogen-responsive genes such as progesterone receptor and cyclin D1 in the mammary gland. Our analysis also revealed that REA is an important repressor of ER transcriptional activity in the mammary gland under natural, as well as ovariectomized and estrogen-replaced, hormonal conditions. Our results indicate that REA is a physiological modulator of ER function in the mammary gland and that its correct gene dosage is required for maintenance of normal ER activity and normal mammary gland development. Consequently, a reduction or loss of REA function may cause overactivation of ER and increase breast cancer risk in humans.