Estrogen acting through estrogen receptor (ER) is able to regulate cell growth and differentiation of a variety of normal tissues and hormone responsive tumors. Ligand activated ER binds DNA and transactivates the promoters of estrogen target genes. In addition, ligand activated ER can interact with other factors to alter the physiology and growth of cells. Using a yeast two-hybrid screen, we have identified an interaction between ER and the pro-apoptotic forkhead transcription factor, FKHR. The ER-FKHR interaction is dependent upon -estradiol and is significantly reduced in the absence of hormone or in the presence of Tamoxifen. GST pull-down assay was used to confirm the interaction and localized two interaction sites-one in the forkhead domain and a second in the carboxy terminus. The FKHR interaction was specific to ER and was not detected with other ligand activated steroid receptors. The related family members, FKHRL1 and AFX, also bound to ER in the presence of -estradiol. FKHR augmented ER transactivation through an estrogen response element. Conversely, ER repressed FKHR mediated transactivation through an insulin response sequence and cell cycle arrest induced by FKHRL1 in MCF7 cells was abrogated by estradiol. These results suggest a novel mechanism of estrogen action which involves regulation of the pro-apoptotic forkhead transcription factors.