Both neu gene overexpression and loss of estrogen receptor (ER) expression have been found to correlate with a poor prognosis in human breast cancer. Studies of breast tumor specimens have suggested that these two factors are not independent, leading us to hypothesize that there is a causal relationship between loss of ER and overexpression of neu. In this report, we confirm that ER can negatively regulate the expression of the neu gene protein product, p185neu, in two ER positive but not an ER negative breast cancer cell line(s). We have produced sublines which stably express human ER from a previously ER negative human breast cancer cell line. We demonstrate that the expression of ER in these cell lines is sufficient to confer the ability to respond to estradiol by down-regulating neu expression at both the protein and RNA levels. Utilizing neu promoter-chloramphenicol acetyltransferase constructs in transient cotransfection assays, we have also shown that this regulation occurs at the transcriptional level and requires the presence of both ER and estradiol. Furthermore, utilizing promoter deletion constructs, we provide evidence that a 140-base pair region of the neu promoter is required for this transcriptional regulation. When placed in a heterologous promoter, this 140-base pair region allows transcriptional repression by estradiol stimulated ER; thus, it represents an estrogen responsive region within the neu promoter. Finally, we have used gel mobility shift analysis to demonstrate an alteration in the nuclear factor(s) binding to this promoter region in estradiol stimulated versus estradiol deprived breast cancer cells. This study provides the first evidence that the inverse clinical correlation between neu and ER expression may be due to transcriptional repression of neu by estradiol stimulated ER.