Estrogen acting through the estrogen receptor (ER) is able to regulate cell growth and differentiation of a variety of normal tissues and hormone-responsive tumors. Ligand-activated ER binds DNA and transactivates the promoters of estrogen target genes. In addition, ligand-activated ER can interact with other factors to alter the physiology and growth of cells. Using a yeast two-hybrid screen, we have identified an interaction between ER alpha and the proapoptotic forkhead transcription factor FKHR. The ER alpha-FKHR interaction depends on beta-estradiol and is reduced significantly in the absence of hormone or the presence of Tamoxifen. A glutathione S-transferase pull-down assay was used to confirm the interaction and localized two interaction sites, one in the forkhead domain and a second in the carboxyl terminus. The FKHR interaction was specific to ER alpha and was not detected with other ligand-activated steroid receptors. The related family members, FKHRL1 and AFX, also bound to ER alpha in the presence of beta-estradiol. FKHR augmented ER alpha transactivation through an estrogen response element. Conversely, ER alpha repressed FKHR-mediated transactivation through an insulin response sequence, and cell cycle arrest induced by FKHRL1 in MCF7 cells was abrogated by estradiol. These results suggest a novel mechanism of estrogen action that involves regulation of the proapoptotic forkhead transcription factors.