The association between breast cancer incidence and alcohol consumption among postmenopausal women was examined in the Iowa Women's Health Study. In January 1986, a cohort of 41,837 postmenopausal women, aged 55-69 years, completed a questionnaire that included alcohol intake and other information. Through December 1989, 493 incident breast cancer cases were identified. Age-adjusted relative risks of consumption of less than 1.5, 1.5-4.9, 5.0-14.9, and 15.0 g or more of alcohol per day compared with abstention were 1.08, 1.10, 1.08, and 1.28, respectively (p for trend = 0.11). After controlling for age, body mass index, age at first livebirth, age at menarche, and family history of breast cancer, the relative risks were 1.18, 1.20, 1.25, and 1.46 (p for trend = 0.04). Multivariate modeling, using Cox proportional hazards regression, revealed a significant multiplicative interaction between alcohol intake and noncontraceptive estrogen use. The relative risks of breast cancer associated with average daily alcohol consumption of 5.0-14.9 and 15.0 g or more were 1.88 (95% confidence interval 1.30-2.72) and 1.83 (95% confidence interval 1.18-2.85), respectively, among ever-users of estrogen; no association between alcohol and breast cancer was observed among never-users of estrogen.