High specific activity estradiol labeled with iodine-125 was used to detect approximately 200 saturable, high-affinity (dissociation constant approximately equal to 1.0 nM) nuclear binding sites in rat (ROS 17/2.8) and human (HOS TE85) clonal osteoblast-like osteosarcoma cells. Of the steroids tested, only testosterone exhibited significant cross-reactivity with estrogen binding. RNA blot analysis with a complementary DNA probe to the human estrogen receptor revealed putative receptor transcripts of 6 to 6.2 kilobases in both rat and human osteosarcoma cells. Type I procollagen and transforming growth factor-beta messenger RNA levels were enhanced in cultured human osteoblast-like cells treated with 1 nM estradiol. Thus, estrogen can act directly on osteoblasts by a receptor-mediated mechanism and thereby modulate the extracellular matrix and other proteins involved in the maintenance of skeletal mineralization and remodeling.