The functional importance of gene enhancers in regulated gene expression is well established. In addition to widespread transcription of long non-coding RNAs (lncRNAs) in mammalian cells, bidirectional ncRNAs are transcribed on enhancers, and are thus referred to as enhancer RNAs (eRNAs). 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 17β-oestradiol (E2)-bound oestrogen receptor α (ER-α) 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-α binding. Cohesin, present on many ER-α-regulated enhancers even before ligand treatment, apparently contributes to E2-dependent gene activation, at least in part by stabilizing E2/ER-α/eRNA-induced enhancer-promoter looping. Our data indicate that eRNAs are likely to have important functions in many regulated programs of gene transcription.