The estrogen receptor (ER) is a ligand-activated enhancer protein that is a member of the steroid/nuclear receptor superfamily. Two genes encode mammalian ER: ERα and ERβ. ER binds to specific DNA sequences called estrogen response elements (EREs) with high affinity and transactivates gene expression in response to estradiol (E₂). The purpose of this review is to summarize how natural and synthetic variations in the ERE sequence impact the affinity of ER–ERE binding and E₂-induced transcriptional activity. Surprisingly, although the consensus ERE sequence was delineated in 1989, there are only seven natural EREs for which both ERα binding affinity and transcriptional activation have been examined. Even less information is available regarding how variations in ERE sequence impact ERβ binding and transcriptional activity. Review of data from our own laboratory and those in the literature indicate that ERα binding affinity does not relate linearly with E₂-induced transcriptional activation. We suggest that the reasons for this discord include cellular amounts of coactivators and adaptor proteins that play roles both in ER binding and transcriptional activation; phosphorylation of ER and other proteins involved in transcriptional activation; and sequence-specific and protein-induced alterations in chromatin architecture.