Estrogenic effects on the proliferation and differentiated cellular functions of bone cells have been described in vivo and in vitro. In particular, stimulatory effects on the growth rate of osteoblasts have been observed, although these are generally small. In an attempt to produce a more sensitive model for the study of estrogen action in bone, HTB 96 human osteoblast-like osteosarcoma cells, which lack endogenous estrogen receptor (ER), were stably transfected with an expression vector coding for the human ER gene. Several HTB 96 sublines expressing ER protein, detected by ligand binding and immunoassay, were isolated. The ability of 17β-estradiol (E2) to induce chloramphenicol acetyltransferase (CAT) activity from a cotransfected reporter vector containing the CAT gene linked to the Xenopus vitellogenin A2 gene estrogen response element demonstrated that the expressed ER was functional. ER continued to be expressed over a 30 week culture period. E2 but not other steroids significantly reduced growth rates and produced an altered morphology in HTB 96 sublines expressing higher levels of ER. The antiestrogen 4-hydroxytamoxifen partially reversed the E2 effect on growth rate. Transient transfection of cells expressing ER with a vector containing the CAT gene linked to the mouse mammary tumor virus long terminal repeat sequence, which contains response elements for the glucocorticoid receptor but not the ER, showed that E2 was able to inhibit CAT induction by dexamethasone. This result suggests that in ER-transfected HTB 9 cells the effects of E2 may result not from direct activation of endogenous genes but instead by transcriptional interference. Thus the mechanisms responsible for the effects of over-expression of ER in ER-negative HTB 96 osteoblast-like bone cells in vitro may differ from those that mediate the effects of estrogens on bone observed in vivo.