A new level of complexity has recently been added to estrogen signaling with the identification of a second estrogen receptor, ERbeta. By screening a rat prostate cDNA library, we detected ERbeta as well as a novel isoform that we termed ERbeta2. ERbeta2 contains an in-frame inserted exon of 54 nucleotides that results in the predicted insertion of 18 amino acids within the ERbeta hormone-binding domain. We also have evidence for the expression of both ERbeta1 and ERbeta2 in human cell lines. Competition ligand binding analysis of bacterially expressed fusion proteins revealed an 8-fold lower affinity of ERbeta2 for 17beta-estradiol (E2) [dissociation constant (Kd approximately 8 nM)] as compared with ERbeta1 (Kd approximately 1 nM). In vitro transcribed and translated ERbeta1 and ERbeta2 bind specifically to a consensus estrogen responsive element in a gel mobility shift assay. Furthermore, we show heterodimerization of ERbeta1 and ERbeta2 with each other as well as with ERalpha. In affinity interaction assays for proteins that associate specifically with the hormone-binding domain of these receptors, we demonstrate that the steroid receptor coactivator SRC-1 interacts in an estrogen-dependent manner with ERalpha and ERbeta1, but not with ERbeta2. In cotransfection experiments with expression plasmids for ERalpha, ERbeta1, and ERbeta2 and an estrogen-responsive element-containing luciferase reporter, the dose response of ERbeta1 to E2 was similar to that of ERalpha although the maximal stimulation was approximately 50%. In contrast, ERbeta2 required 100- to 1000-fold greater E2 concentrations for maximal activation. Thus, ERbeta2 adds yet another facet to the possible cellular responses to estrogen.