We determined the differential response of a novel SERM, SP500263, on estrogen receptor (ER) alpha and the more recently cloned ER-beta. Because of the high homology of amino acid residues in the ligand-binding domain of ER-alpha and ER-beta, we were not surprised to find that SP500263 binds to both ERs equally well. In contrast, SP500263 acts as a strong estrogen agonist in a strictly ER-alpha-specific manner in U2OS osteosarcoma cell lines blocking the production of interleukin (IL) 6 and granulocyte macrophage colony-stimulating factor. SP500263 also blocked IL-6 production in primary bone cells. The mechanism of this inhibition is different from the classic estrogen stimulation involving an estrogen response element (ERE). SP500263 does not activate gene expression through an ERE. In contrast to the results observed in U2OS cells, SP500263 acts as a strong estrogen antagonist in an MCF-7 breast cancer proliferation assay. Therefore, SP500263 is a member of a series of next-generation SERMs with functional selectivity toward ER-alpha and a mixed agonist/antagonist profile in a bone cell assay versus a breast cancer assay. The panel of assays described herein allow for the development of receptor-specific ligands that may be further developed into novel pharmaceuticals with an improved profile for the treatments of osteoporosis and breast cancer.