It is increasingly accepted that steroidal receptor co-regulators may also function in the cytoplasmic compartment. Proline-, glutamic acid-, and leucine-rich protein-1 (PELP1) is a novel coregulator that plays a role in both the genomic and extranuclear actions of estrogen receptors (ER) in hormonally responsive tissues. In this study using breast tumor arrays, we found that PELP1 was localized only in the cytoplasm in 58% of the PELP1-positive breast tumors. To help explain the significance of the cytoplasmic localization of PELP1 in human breast tumors, we created a mutant protein that was expressed only in the cytoplasm (PELP1-cyto) and then generated a model system wherein MCF-7 breast cancer cells were engineered to specifically express this mutant. We found that PELP1-cyto cells were hypersensitive to estrogen but resistant to tamoxifen. PELP1-cyto cells, but not parental MCF-7 cells, formed xenograft tumors in nude mice. In addition, PELP1-cyto cells exhibited increased association of PELP1 with Src, enhanced mitogen-activated protein kinase (MAPK) activation, and constitutive activation of AKT. The altered localization of PELP1 was sufficient to trigger the interaction of PELP1 with the p85 subunit of phosphatidylinositol-3-kinase (PI3K), leading to PI3K activation. In addition, PELP1 interacted with epidermal growth factor receptors and participated in growth factor-mediated ER transactivation functions. Our results suggest that the altered localization of PELP1 modulates sensitivity to antiestrogens, potentiates tumorigenicity, presumably via the stimulation of extranuclear estrogen responses, such as the activation of MAPK and AKT, and also enhance cross-regulation of ER transactivation activity by growth factors.