RATIONALE: Chemoprevention therapy is the use of certain drugs to try to prevent the development or recurrence of cancer. The use of fenretinide and tamoxifen before surgery may be an effective way to prevent the recurrence of or further development of breast cancer.

PURPOSE: Randomized phase II trial to study the effectiveness of fenretinide and tamoxifen given before surgery in treating women with breast cancer.

OBJECTIVES: I. Determine the feasibility of identifying surrogate endpoint biomarkers in women with breast ductal carcinoma in situ and associated neoplastic and preneoplastic lesions. II. Determine whether treatment with fenretinide and tamoxifen administered daily will cause significant modulation of proposed surrogate endpoint biomarkers in this patient population.

OUTLINE: This is a randomized, placebo controlled study. Patients are stratified according to histological diagnosis (hyperplasia vs carcinoma). All patients undergo a core biopsy and fine needle aspiration of the index lesion and are then assigned randomly to a treatment arm. Arm I receives tamoxifen and fenretinide daily. Arm II receives a placebo daily. Both arms continue for 14-28 days, until definitive surgery or a second biopsy is performed.

PROJECTED ACCRUAL: A total of 100 patients will be accrued for this study, 50 patients per arm.

DISEASE CHARACTERISTICS: Mammogram highly suspicious for ductal carcinoma in situ or early invasive carcinoma Branching or linear microcalcifications clustered or distributed segmentally in the breast without an associated palpable or mammographic mass Palpable thickening or nipple discharge allowed At least 5 mm area of calcification or contain enough calcium for core biopsies Small palpable carcinoma (T1 or T2) with no palpable axillary lymph nodes (N0) No definitive local therapy Atypical hyperplasia (ductal or lobular) and/or carcinoma on initial diagnostic biopsy Hormone receptor status: Not specified

PATIENT CHARACTERISTICS: Age: Over 18 Sex: Female Menopausal status: Not specified Performance status: Zubrod 0-2 Life expectancy: Not specified Hematopoietic: Absolute granulocyte count greater than 1500/mm3 Platelet count greater than 100,000/mm3 Hepatic: Bilirubin no greater than 1.5 mg/dL Renal: Creatinine no greater than 1.5 mg/dL Cardiovascular: No uncontrolled congestive heart failure Other: Fasting serum triglycerides less than 400 mg/dL Fertile patients must use effective contraception during and for one year after completing fenretinide therapy No concurrent serious illness or infection, e.g., septicemia No prior thromboembolic disease No prior degenerative retinal disease

PRIOR CONCURRENT THERAPY: Biologic therapy: Not specified Chemotherapy: At least 5 years since prior chemotherapy Endocrine therapy: At least 12 months since prior tamoxifen therapy No concurrent estrogen therapy At least 3 months since prior anabolic steroids Radiotherapy: No prior radiotherapy to the chest or breast Surgery: See Disease Characteristics Other: No vitamin A supplementation greater than 25,000 IU At least 12 months since prior retinoid therapy