Purpose: Mammalian heparanase degrades heparan sulfate, the main polysaccharide of the basement membrane. Heparanase is an important determinant in cancer progression, acting via the breakdown of extracellular barriers for invasion, as well as release of heparan sulfate - bound angiogenic and growth-promoting factors. The present study was undertaken to elucidate molecular mechanisms responsible for heparanase overexpression in breast cancer. Experimental Design: To characterize heparanase regulation by estrogen and tamoxifen and its clinical relevance for breast tumorigenesis, we applied immunohistochemical analysis of tissue microarray combined with chromatin immunoprecipitation assay, reverse transcription-PCR, and Western blot analysis. Results: A highly significant correlation (P < 0.0001) between estrogen receptor (ER) positivity and heparanase overexpression was found in breast cancer. Binding of ER to heparanase promoter accompanied estrogen-induced increase in heparanase expression by breast carcinoma cells. Surprisingly, heparanase transcription was also stimulated by tamoxifen, conferring a proliferation advantage to breast carcinoma cells grown on a naturally produced extracellular matrix. Heparanase overexpression was invariably detected in ER-positive second primary breast tumors, developed in patients receiving tamoxifen for the initial breast carcinoma. The molecular mechanism of the estrogen like effect of tamoxifen on heparanase expression involves recruitment of transcription coactivator AIB1 to the heparanase promoter. Conclusions: Heparanase induction by ligand-bound ER represents an important pathway in breast tumorigenesis and may be responsible, at least in part, for the failure of tamoxifen therapy in some patients. Our study provides new insights on breast cancer progression and endocrine therapy resistance, offering future strategies for delaying or reversing this process.