Although a small number of estrogen receptors (ER) were visualized in osteoblastic cells, and estradiol (E2) has some effects on osteoblasts in vitro, the direct action of E2 on osteoblasts has not been fully established. To determine the presence of functional ER in osteoblasts, we transfected cells with a plasmid containing the chloramphenicol acetyl transferase (CAT) reporter gene and the estrogen-responsive element (ERE) from the vitellogenin A2 gene. E2-dependent induction of CAT activity was determined 48 h after transient transfection and subsequent treatment with 10–100 nM 17β-E2. 17β-E2, but not 17α-E2, dihydrotestosterone, or progesterone, induced CAT activity in a dose-dependent manner (up to 6-fold) in rat calvarial fraction-3, RCT-3, PyMS, and UMR-106 cells as well as in the human osteosarcoma cell line SaOS-2/B-10. In contrast, E2 had no effect on the induction of CAT activity in the preosteoblastic cell lines RCT-1 and TRAB-11, in the rat osteosarcoma cell line ROS 17/2.8, and in the fibroblastic cell lines BALB-c/3T3 and NRK. Overexpression of ER using a simian virus-40-based expression vector not only conferred or enhanced E2-dependent induction of CAT in all cell types, but augmented E2-dependent expression of insulin-like growth factor-I and E2-stimulated DNA synthesis in primary calvarial and PyMS osteoblastic cells, respectively. These data show the presence of low levels of functional endogenous ER in some, but not all, osteoblastic cells and suggest that the abundance of ER may be rate limiting in the action of E2 on these cells.