Although type I interferons (IFNs) play multifaceted roles during tumorigenesis and cancer treatment, the interplay between type I IFNs and estrogen signaling in breast cancer (BC) microenvironment is not well understood. Here, we report a novel function of type I IFNs in inducing aromatase expression in adipose tissues surrounding BC, which potentiates the E2-dependent growth of estrogen receptor (ER)-positive BC. First, we found that expression levels of type I IFNs correlate negatively with clinical outcome but positively with tumor grade in patients with ER-positive BC. Levels of type I IFNs were elevated in cocultured media of immune cells and BC cells, which increased aromatase expression and E2 production in Simpson–Golabi–Behmel syndrome preadipocytes. The type I IFN-induced aromatase expression was dependent on IFN-γ-inducible protein 16 (IFI16), which is encoded by an interferon-stimulated gene. At the molecular level, type I IFNs led to recruitment of HIF1α–IFI16–PRMT2 complex to the hypoxia-response element located in the aromatase PI.3/PII promoter. Next, we generated an adipocyte-specific Ifi204, which is a mouse ortholog of human IFI16, knockout mouse (Ifi204-AKO). IFNβ induced E2 production in the preadipocytes isolated from the control mice, but such E2 production was far lower in the Ifi204-AKO preadipocytes. Importantly, the growth of orthotopically inoculated E0771 ER-positive mammary tumors was reduced significantly in the Ifi204-AKO mice. Taken together, our findings provide novel insights into the crosstalk between type I IFNs and estrogen signaling in the progression of ER-positive BC.