Prolactin (PRL) contributes to the growth of normal and malignant breast tissues. PRL initiates signaling by engaging the prolactin receptor (PRLr), a transmembrane receptor belonging to the cytokine receptor family. The accepted view has been that PRL activates the PRLr by inducing dimerization of the receptor, but recent reports show ligand-independent dimerization of other cytokine receptors. Using co-immunoprecipitation assays, we have confirmed ligand-independent dimerization of the PRLr in T47D breast cancer and HepG2 liver carcinoma cells. In addition, mammalian cells transfected with differentially epitope-tagged isoforms of the PRLr indicated that long, intermediate and S1 PRLrs dimerized in a ligand-independent manner. To determine the domain(s) involved in PRLr ligand-independent dimerization, we generated PRLr constructs as follows: (1) the TM-ICD, which consisted of the transmembrane (TM) domain and the intracellular domain (ICD) but lacked the extracellular domain (ECD), and (2) the ECD-TM, which consisted of the TM domain and the ECD but lacked the ICD. These constructs dimerized in a ligand-independent manner in mammalian cells, implicating a significant role for the TM domain in this process. These truncated PRLrs were functionally inert alone or in combination in cells lacking the PRLr. However, when introduced into cells containing endogenous PRLr, the ECD-TM inhibited hPRLr signaling, whereas the TM-ICD potentiated hPRLr signaling. These studies indicate that the ECD-TM and the TM-ICD are capable of modulating PRLr function. We also demonstrated an endogenous TM-ICD in T47D cells, suggesting that these findings are relevant to PRL-signaling pathways in breast cancer.