Estrogen receptor (ER) alpha localizes to both the nucleus and the plasma membrane, mediating estrogen-dependent genomic and nongenomic signaling, respectively. In some cells, ERalpha appears to be excluded from the nucleus, and it is unclear whether genomic signaling takes place. The purpose of this study was to determine whether membrane-associated ERalpha is capable of genomic signaling, or whether this pool of receptors strictly serves membrane-mediated signaling. ERalpha fused to the C-terminal cytoplasmic tail of bovine rhodopsin (Rh-ERalpha) activates ER response element-dependent transcription only in the presence of estrogen; the activity is antagonized by the estrogen antagonist ICI 182,780 and by the dominant-negative mutant of ERalpha and is unaffected by inhibitors of MAPKs and Akt signaling, indicating that this was due to direct genomic action. The activity of Rh-ERalpha containing the activating Y537S mutation was also estrogen dependent, suggesting that estrogen gated the entry of Rh-ERalpha into the nucleus. Indeed, cell fractionation studies demonstrated that Rh-ERalpha protein, in contrast to ERalpha that was nuclear at baseline, was excluded from the nucleus in the absence of hormone, and localized to the inner nuclear membrane on incubation with estrogen. These data demonstrate that membrane tethered ERalpha is capable of nuclear function and that its transcriptional activity is regulated by hormone-dependent entry into the inner nuclear membrane. Furthermore, these experiments provide evidence that under certain circumstances, membrane proteins are capable of nuclear function without detectable nucleoplasmic localization.