Progesterone receptor (PR) expression is used as a biomarker of oestrogen receptor-alpha (ER alpha) function and breast cancer prognosis. Here we show that PR is not merely an ER alpha-induced gene target, but is also an ER alpha-associated protein that modulates its behaviour. In the presence of agonist ligands, PR associates with ER alpha to direct ER alpha chromatin binding events within breast cancer cells, resulting in a unique gene expression programme that is associated with good clinical outcome. Progesterone inhibited oestrogen-mediated growth of ER alpha(+) cell line xenografts and primary ER alpha(+) breast tumour explants, and had increased anti-proliferative effects when coupled with an ER alpha antagonist. Copy number loss of PGR, the gene coding for PR, is a common feature in ER alpha(+) breast cancers, explaining lower PR levels in a subset of cases. Our findings indicate that PR functions as a molecular rheostat to control ER alpha chromatin binding and transcriptional activity, which has important implications for prognosis and therapeutic interventions.