Endometriosis is a complex estrogen-dependent disease that is defined as the presence of endometrial glands and stroma outside the uterine cavity. The etiology of endometriosis is multifactorial and includes complex interactions of genetic, immunological, hormonal and environmental factors. Many theories have been proposed, but no single theory can explain all aspects of endometriosis, suggesting that endometriosis is a heterogeneous disease. This review presents the current theories on the pathogenesis of endometriosis, followed by an overview on estrogen metabolism in normal endometrium and diseased endometrium of endometriosis patients. The potential role of aberrant expression of individual estrogen-metabolizing enzymes is discussed, and a model mechanism for increased formation of estradiol is presented separately for different types of endometriosis. The disturbed expression of estrogen receptors in endometriosis is detailed, and the estrogen biosynthetic enzymes and receptors are discussed as novel therapeutic targets for the treatment of endometriosis.