Considerable interest exists in developing an artificial system for the control of gene expression, based on the hormone binding domain (HBD) of steroid receptors. In this study we describe a yeast based approach which allows the identification of mutations within the HBD of steroid receptors, in this case the estrogen receptor, which result in altered specificity of the HBD with respect to its activation by ligands. Using this approach in yeast, we identified an estrogen receptor (HBD) mutant (His524 to Gln) whose activation by 17 beta-estradiol (E2) is significantly reduced while activation by a diphenol indene-ol compound (GR132706X) is increased, compared to the wild type estrogen receptor. When the activity of the mutant receptor was tested in mammalian cells the altered specificity was maintained. A chimeric transcription factor was constructed, in which the mutated estrogen receptor HBD was linked to the DNA binding domain of GAL4 and an 11 amino acid transcriptional activation domain of RelA. Reporter gene activation by this chimera was decreased in response to E2 and increased in response to GR132706X, as compared to the corresponding chimeric transcription factor containing the wild type estrogen receptor HBD. This approach should allow the development of a steroid receptor HBD based regulator of gene expression, whose activity is controlled specifically by a synthetic ligand, that would not affect the activity of endogenous steroid receptors.