Objective To examine the association between smoking and risk of invasive breast cancer using quantitative measures of lifetime passive and active smoking exposure among postmenopausal women. Design Prospective cohort study. Setting 40 clinical centres in the United States. Participants 79 990 women aged 50–79 enrolled in the Women’s Health Initiative Observational Study during 1993–8. Main outcome measures Self reported active and passive smoking, pathologically confirmed invasive breast cancer. Results In total, 3520 incident cases of invasive breast cancer were identified during an average of 10.3 years of follow-up. Compared with women who had never smoked, breast cancer risk was elevated by 9% among former smokers (hazard ratio 1.09 (95% CI 1.02 to 1.17)) and by 16% among current smokers (hazard ratio 1.16 (1.00 to 1.34)). Significantly higher breast cancer risk was observed in active smokers with high intensity and duration of smoking, as well as with initiation of smoking in the teenage years. The highest breast cancer risk was found among women who had smoked for ≥50 years or more (hazard ratio 1.35 (1.03 to1.77) compared with all lifetime non-smokers, hazard ratio 1.45 (1.06 to 1.98) compared with lifetime non-smokers with no exposure to passive smoking). An increased risk of breast cancer persisted for up to 20 years after smoking cessation. Among women who had never smoked, after adjustment for potential confounders, those with the most extensive exposure to passive smoking (≥10 years’ exposure in childhood, ≥20 years’ exposure as an adult at home, and ≥10 years’ exposure as an adult at work) had a 32% excess risk of breast cancer compared with those who had never been exposed to passive smoking (hazard ratio 1.32 (1.04 to 1.67)). However, there was no significant association in the other groups with lower exposure and no clear dose response to cumulative passive smoking exposure. Conclusions Active smoking was associated with an increase in breast cancer risk among postmenopausal women. There was also a suggestion of an association between passive smoking and increased risk of breast cancer.