Estrogen has been demonstrated to promote therapeutic reendothelialization after vascular injury by bone marrow (BM)-derived endothelial progenitor cell (EPC) mobilization and phenotypic modulation. We investigated the primary hypothesis that estrogen regulates physiological postnatal vasculogenesis by modulating bioactivity of BM-derived EPCs through the estrogen receptor (ER), in cyclic hormonally regulated endometrial neovascularization. Cultured human EPCs from peripheral blood mononuclear cells (PB-MNCs) disclosed consistent gene expression of ER alpha as well as downregulated gene expressions of ER beta. Under the physiological concentrations of estrogen (17beta-estradiol, E2), proliferation and migration were stimulated, whereas apoptosis was inhibited on day 7 cultured EPCs. These estrogen-induced activities were blocked by the receptor antagonist, ICI182,780 (ICI). In BM transplanted (BMT) mice with ovariectomy (OVX) from transgenic mice overexpressing beta-galactosidase (lacZ) regulated by an endothelial specific Tie-2 promoter (Tie-2/lacZ/BM), the uterus demonstrated a significant increase in BM-derived EPCs (lacZ expressing cells) incorporated into neovasculatures detected by CD31 immunohistochemistry after E2 administration. The BM-derived EPCs that were incorporated into the uterus dominantly expressed ER alpha, rather than ER beta in BMT mice from BM of transgenic mice overexpressing EGFP regulated by Tie-2 promoter with OVX (Tie-2/EGFP/BMT/OVX) by ERs fluorescence immunohistochemistry. An in vitro assay for colony forming activity as well as flow cytometry for CD133, CD34, KDR, and VE-cadherin, using human PB-MNCs at 5 stages of the female menstrual-cycle (early-proliferative, pre-ovulatory, post-ovulatory, mid-luteal, late-luteal), revealed cycle-specific regulation of EPC kinetics. These findings demonstrate that physiological postnatal vasculogenesis involves cyclic, E2-regulated bioactivity of BM-derived EPCs, predominantly through the ER alpha.