Osteoblasts respond in direct and indirect ways to estrogens, and age-dependent changes in hormone levels and bone health can be limited by focused hormone replacement therapy. In this study, we report the release and isolation of an estrogen receptor agonist from osteoblast cultures. This entity reprises many aspects of estradiol activity in isolated osteoblasts, but differs from authentic estradiol by several biochemical and physical criteria. At levels that occur in conditioned medium from differentiating osteoblast cultures, the agonist directly drives gene expression through estrogen-sensitive response elements, activates the obligate osteoblast transcription factor Runx2, and potently enhances Smad-dependent gene expression in response to TGF-β, but exhibits relatively lesser suppressive effects on gene expression through C/EBP and AP-1-binding protein transcription factors. Estrogen receptor agonist activity is resistant to heating at 100°C and separable from the bulk of the remaining alcohol- and hexane-soluble molecules by C18 chromatography. MS and molecular fragmentation analyses predict a M_r of 415.2 to 437.2. Therefore, in addition to earlier studies showing that osteoblasts readily respond to and metabolize various sex steroid-like substrates, we find that they also generate a potent estrogen receptor agonist during differentiation in vitro. Changes in the availability of a molecule like this within bone may relate to differences in skeletal integrity with aging or metabolic disease.