Mental rotation is a visuospatial task associated with pronounced sex differences. Performance is also affected by gonadal hormones such as testosterone and estradiol. To better understand hormonal modulation of the neural substrates of mental rotation, the present study examined the influence of estradiol using functional MRI. Ten premenopausal women were tested on a 3D mental rotation task during the early follicular and late follicular phases of the menstrual cycle. Change in estradiol between the two phases was confirmed by hormone assays. Brain activation patterns were similar across the two phases, but the change in estradiol had different associations with the two hemispheres. Better performance in the late follicular than the early follicular phase was associated with a pattern of reduced recruitment of the right hemisphere and increased recruitment of the left hemisphere. The increased recruitment of the left hemisphere was directly associated with greater changes in estradiol. Given that the right hemisphere is the dominant hemisphere in visuospatial processing, our results suggest that estradiol is associated with reduced functional asymmetry, consistent with recent accounts of hormonal modulation of neurocognitive function.