It is generally assumed that male genital development is determined by androgens on a default program leading to female genitalia. Female genitalia virilization is due to high levels of androgens, whereas feminization is linked to reduction or lack of fetal androgen. Excess androgen determines sex reversion in female, whereas excess estrogen does not cause male feminization. In the present study, we investigate the presence of androgen receptors (AR) and estrogen receptors (ER) in human fetal penile tissue and in a cellular model of human fetal penile smooth muscle cells (hfPSMC). By immunohistochemistry, we showed the presence of ER and AR in the developing penile tissue of male fetuses. Besides the presence of AR, hfPSMC showed ERalpha/beta as demonstrated by RT-PCR, Western blot, and binding techniques. These receptors are functionally active because cell stimulation with 17beta-estradiol increased progesterone receptor B expression and inhibited hfPSMC growth, both effects being reversed by tamoxifen. Conversely, cell proliferation was stimulated by R1881 and testosterone, an effect enhanced by letrozole. These findings are the first demonstration of the presence of functional ER in differentiating male external genitalia and indicate a possible novel inhibitory role of estrogens in the regulation of the development of these sex structures.