We describe a biosensor that reports the binding of small-molecule ligands to proteins as changes in growth of temperature-sensitive yeast. The yeast strains lack dihydrofolate reductase (DHFR) and are complemented by mouse DHFR containing a ligand-binding domain inserted in a flexible loop. Yeast strains expressing two ligand-binding domain fusions, FKBP12-DHFR and estrogen receptor-alpha (ERalpha)-DHFR, show increased growth in the presence of their corresponding ligands. We used this sensor to identify mutations in residues of ERalpha important for ligand binding, as well as mutations generally affecting protein activity or expression. We also tested the sensor against a chemical array to identify ligands that bind to FKBP12 or ERalpha. The ERalpha sensor was able to discriminate among estrogen analogs, showing different degrees of growth for the analogs that correlated with their relative binding affinities (RBAs). This growth assay provides a simple and inexpensive method to select novel ligands and ligand-binding domains.