Overexpression of the human REL transcription factor can malignantly transform chicken spleen cells in vitro. In this report, we have created and characterized a cDNA encoding a chimeric protein (RELD424-490-ER) in which sequences of a highly transforming REL mutant (RELD424-490) are fused to the ligand-binding domain of the human estrogen receptor (ER). Surprisingly, RELD424-490-ER is constitutively nuclear in A293 cells, and RELD424-490-ER activates transcription in the absence, but not in the presence, of estrogen in jB-site reporter gene assays. Furthermore, RELD424-490-ER transforms chicken spleen cells in the absence of estrogen, but the addition of estrogen blocks the ability of RELD424-490-ER-transformed cells to form colonies in soft agar, even though estrogen induces increased nuclear translocation of RELD424-490-ER in these cells. ERa can also inhibit REL-dependent transactivation in trans in an estrogen-dependent manner, and ERa can interact with REL in vitro. Thus, the RELD424-490-ER fusion protein shows an unusual, reverse hormone regulation, in that its most prominent biological activities (transformation and transactivation) are inhibited by estrogen, probably due to an estrogen-induced interaction between the ER sequences and sequences in the Rel homology domain. Nevertheless, these results indicate that the continual activity of REL is required to sustain the transformed state of chicken spleen cells in culture, suggesting that direct and specific inhibitors of REL may have therapeutic efficacy in certain human lymphoid cancers.