The estrogen receptor (ER) is a member of a large superfamily of nuclear receptors that regulates the transcription of estrogen-responsive genes. Several recent studies have demonstrated that XBP-1 mRNA expression is associated with ERalpha status in breast tumors. However, the role of XBP-1 in ERalpha signaling remains to be elucidated. More recently, two forms of XBP-1 were identified due to its unconventional splicing. We refer to the spliced and unspliced forms of XBP-1 as XBP-1S and XBP-1U, respectively. Here, we report that XBP-1S and XBP-1U enhanced ERalpha-dependent transcriptional activity in a ligand-independent manner. XBP-1S had stronger activity than XBP-1U. The maximal effects of XBP-1S and XBP-1U on ERalpha transactivation were observed when they were co-expressed with full-length ERalpha. SRC-1, the p160 steroid receptor coactivator family member, synergized with XBP-1S or XBP-1U to potentiate ERalpha activity. XBP-1S and XBP-1U bound to the ERalpha both in vitro and in vivo in a ligand-independent fashion. XBP-1S and XBP-1U interacted with the ERalpha region containing the DNA-binding domain. The ERalpha-interacting regions on XBP-1S and XBP-1U have been mapped to two regions, including the N-terminal basic region leucine zipper domain (bZIP) and the C-terminal activation domain. The bZIP-deleted mutants of XBP-1S and XBP-1U completely abolished ERalpha transactivation by XBP-1S and XBP-1U. These findings suggest that XBP-1S and XBP-1U may directly modulate ERalpha signaling in both the absence and presence of estrogen and, therefore, may play important roles in the proliferation of normal and malignant estrogen-regulated tissues.