In the mouse, ovariectomy (OVX) leads to significant reductions in cancellous bone volume while estrogen (17β-estradiol, E2) replacement not only prevents bone loss but can increase bone formation. As the E2-dependent increase in bone formation would require the proliferation and differentiation of osteoblast precursors, we hypothesized that E2 regulates mesenchymal stem cells (MSCs) activity in mouse bone marrow. We therefore investigated proliferation, differentiation, apoptosis, and estrogen receptor (ER) α and β expression of primary culture MSCs isolated from OVX and sham-operated mice. MSCs, treated in vitro with 10−7 M E2, displayed a significant increase in ERα mRNA and protein expression as well as alkaline phosphatase (ALP) activity and proliferation rate. In contrast, E2 treatment resulted in a decrease in ERβ mRNA and protein expression as well as apoptosis in both OVX and sham mice. E2 up-regulated the mRNA expression of osteogenic genes for ALP, collagen I, TGF-β1, BMP-2, and cbfa1 in MSCs. In a comparison of the relative mRNA expression and protein levels for two ER isoforms, ERα was the predominant form expressed in MSCs obtained from both OVX and sham-operated mice. Cumulatively, these results indicate that estrogen in vitro directly augments the proliferation and differentiation, ERα expression, osteogenic gene expression and, inhibits apoptosis and ERβ expression in MSCs obtained from OVX and sham-operated mice. Co-expression of ERα, but not ERβ, and osteogenic differentiation markers might indicate that ERα function as an activator and ERβ function as a repressor in the osteogenic differentiation in MSCs. These results suggest that mouse MSCs are anabolic targets of estrogen action, via ERα activation. J. Cell. Biochem. Suppl. 36: 144–155, 2001. © 2001 Wiley-Liss, Inc.