We have previously identified tyrosine-537 as a constitutively phosphorylated site on the human estrogen receptor (hER). A 12-amino acid phosphotyrosyl peptide containing a selected sequence surrounding tyrosine-537 was used to investigate the function of phosphotyrosine-537. The phosphotyrosyl peptide completely blocked the binding of the hER to an estrogen response element (ERE) in a gel mobility shift assay. Neither the nonphosphorylated tyrosyl peptide nor an unrelated phosphotyrosyl peptide previously shown to inhibit the signal transducers and activators of transcription factor (STAT) blocked binding of the hER to the ERE. The hER phosphotyrosyl peptide was shown by molecular sizing chromatography to dissociate the hER dimer into monomers. The hER specifically bound the 32P-labeled phosphotyrosyl peptide, indicating that the inhibition of ERE binding was caused by the phosphotyrosyl peptide binding directly to the hER and blocking dimerization. These data suggest that the phosphorylation of tyrosine-537 is a necessary step for the formation of the hER dimer. In addition, we propose that the dimerization of the hER occurs by a previously unrecognized Src homology 2 domain (SH2)-like phosphotyrosyl coupling mechanism. Consequently, the phosphotyrosyl peptide represents a class of antagonists that inhibits estrogen action by a mechanism other than interacting with the receptor's hormone binding site.