Hydroxysteroid (17-beta) dehydrogenase type 1 (HSD17B1) converts low-active estrogen estrone to highly active estradiol. Estradiol is necessary for normal postpubertal mammary gland development; however, elevated estradiol levels increase mammary tumorigenesis. To investigate the significance of the human HSD17B1 enzyme in the mammary gland, transgenic mice universally overexpressing human HSD17B1 were used (HSD17B1TG mice). Mammary glands obtained from HSD17B1TG females at different ages were investigated for morphology and histology, and HSD17B1 activity and estrogen receptor activation in mammary gland tissue were assessed. To study the significance of HSD17B1 enzyme expression locally in mammary gland tissue, HSD17B1-expressing mammary epithelium was transplanted into cleared mammary fat pads of wild-type females, and the effects on mammary gland estradiol production, epithelial cells and the myoepithelium were investigated. HSD17B1TG females showed increased estrone to estradiol conversion and estrogen-response element-driven estrogen receptor signaling in mammary gland tissue, and they showed extensive lobuloalveolar development that was further enhanced by age along with an increase in serum prolactin concentrations. At old age, HSD17B1TG females developed mammary cancers. Mammary-restricted HSD17B1 expression induced lesions at the sites of ducts and alveoli, accompanied by peri- and intraductal inflammation and disruption of the myoepithelial cell layer. The lesions were shown to be estrogen dependent, as treatment with an antiestrogen, ICI 182,780, starting when lesions were already established reversed the phenotype. These data elucidate the ability of human HSD17B1 to enhance estrogen action in the mammary gland in vivo and indicate that HSD17B1 is a factor inducing phenotypic alterations associated with mammary tumorigenesis.