As the primary mediators of estrogen signaling in vertebrates, estrogen receptors (ERs) play crucial roles in reproduction, development, and behavior. They are also the major mediators of endocrine disruption by xenobiotic pollutants that mimic or block estrogen action. ERs that are sensitive to estrogen and endocrine disrupters have long been thought to be restricted to vertebrates: although there is evidence for estrogen signaling in invertebrates, the only ERs studied to date, from mollusks and cephalochordates, have been insensitive to estrogen and therefore incapable of mediating estrogen signaling or disruption. To determine whether estrogen sensitivity is ancestral or a unique characteristic of vertebrate ERs, we isolated and characterized ERs from two annelids, Platynereis dumerilii and Capitella capitata, because annelids are the sister phylum to mollusks and have been shown to produce and respond to estrogens. Functional assays show that annelid ERs specifically activate transcription in response to low estrogen concentrations and bind estrogen with high affinity. Furthermore, numerous known endocrine-disrupting chemicals activate or antagonize the annelid ER. This is the first report of a hormone-activated invertebrate ER. Our results indicate that estrogen signaling via the ER is as ancient as the ancestral bilaterian animal and corroborate the estrogen sensitivity of the ancestral steroid receptor. They suggest that the taxonomic scope of endocrine disruption by xenoestrogens may be very broad and reveal how functional diversity evolved in a gene family central to animal endocrinology.