The relationship between estrogen receptor (ER)-estrogen response element (ERE) binding affinity and estradiol (E(2))-induced transcription has not been systematically or quantitatively tested. We examined the influence of ERE palindrome length and the 3' ERE flanking sequence on ERalpha and ERbeta affinity binding in vitro and on the induction of reporter gene activity in transfected cells. The addition of one nucleotide in each arm of the 13 bp ERE palindrome, forming a 15 bp ERE palindrome, increased ERalpha and ERbeta affinity and transcription. In contrast, the addition of an AT-rich flanking sequence from genes highly stimulated by E(2) had little effect on affinity or reporter gene activity. Notable differences between ERalpha and ERbeta include: both K(d) and transcriptional induction were generally higher for ERalpha than ERbeta, better correlation between ERE palindrome length and transcriptional induction for ERalpha than ERbeta, and a better correlation between (ER-ERE)K(d) and transcriptional induction for ERalpha than for ERbeta.