The functional importance of gene enhancers in regulated gene expression is well established(1-3). In addition to widespread transcription of long non-coding RNAs (lncRNAs) in mammalian cells(4-6), bidirectional ncRNAs are transcribed on enhancers, and are thus referred to as enhancer RNAs (eRNAs)(7-9). However, it has remained unclear whether these eRNAs are functional or merely a reflection of enhancer activation. Here we report that in human breast cancer cells 17 beta-oestradiol (E2)-bound oestrogen receptor alpha (ER-alpha) causes a global increase in eRNA transcription on enhancers adjacent to E2-upregulated coding genes. These induced eRNAs, as functional transcripts, seem to exert important roles for the observed ligand-dependent induction of target coding genes, increasing the strength of specific enhancer-promoter looping initiated by ER-alpha binding. Cohesin, present on many ER-alpha-regulated enhancers even before ligand treatment, apparently contributes to E2-dependent gene activation, at least in part by stabilizing E2/ER-alpha/eRNA-induced enhancer-promoter looping. Our data indicate that eRNAs are likely to have important functions in many regulated programs of gene transcription.