The primary biological effect of the estrogen estradiol-17 beta (17 beta E2) on bone is to decrease bone resorption. However, whether 17 beta E2 affects osteoclast differentiation or function directly or through its action on osteoblasts is unclear. To investigate this question we examined the human preosteoclastic cell line FLG 29.1 for evidence of functional estrogen receptors (ERs). Southern blotting of reverse transcription-PCR amplification products with a 32P-labeled cDNA probe for the human ER mRNA demonstrated that FLG 29.1 cells express ER mRNA. Binding of [3H]17 beta E2 to nuclear ERs was steroid specific with approximately 400 saturable, high affinity (Kd approximately 1 nM) binding sites per cell nucleus. Nuclear ERs covalently labeled with [3H]tamoxifen aziridine showed an apparent molecular weight of 65,000 by SDS/PAGE and Western blotting with the D75 monoclonal antibody to human ER. Pretreatment of cells with 0.1, 1.0, or 10 nM 17 beta E2 induced a dose- and time-dependent specific binding of progesterone to FGL 29.1 cells, and stimulation of the cells with 10 nM and 100 nM 17 beta E2 significantly (P < 0.05) reduced cell proliferation. Transcriptional activity of the ER gene was detected by transient transfection of cells with the pERE-BLCAT plasmid containing the estrogen response element for the vitellogenin A2 gene and the bacterial chloramphenicol acetyltransferase reporter gene. Treatment of FLG 29.1 cells with 10 nM 17 beta E2 increased chloroamphenicol acetyltransferase expression from 5- to 29-fold compared to controls. These observations suggest a potential role for estrogen in osteoclastogenesis.