Most mammalian cells neither express any Gal4-like activity nor endogenous estrogen receptor, thus rendering estrogen an inert signal for them. For these two reasons we have developed a selective induction system based on the estrogen-regulable transcription factor Gal-ER. Gal-ER consists of the DNA-binding domain of the yeast Gal4 protein fused to the hormone-binding domain of the human estrogen receptor and hence should exclusively regulate a transfected gene under the control of a Gal4-responsive promoter in mammalian cells. Two major improvements of this induction system were made. First, a synthetic Gal4-responsive promoter was constructed which consisted of four Gal4-binding sites, an inverted CCAAT element, a TATA box, and the adenovirus major late initiation region. This promoter showed extremely low basal activity in the absence and high inducibility in the presence of ligand-activated Gal-ER. Second, the transcription factor Gal-ER was rendered more potent and less susceptible to cell type-specific variation by fusing the strong activating domain of the herpesvirus protein VP16 onto its C terminus. In response to estrogen, Gal-ER-VP16 induced the Gal4-responsive promoter at least 100-fold in transiently transfected NIH 3T3 and P19 cells. Rat fibroblast cell lines expressing integrated Gal-ER and Gal4-responsive fos genes were transformed in a strictly estrogen-dependent manner. The exogenous fos gene was rapidly induced to maximal levels within 1-2 hr of estrogen addition. Elevated Fos activity in turn stimulated transcription of the endogenous fra-1 gene. These data demonstrate the utility of the Gal-ER induction system as a powerful genetic switch for regulating heterologous genes and, in particular, for identifying Fos targets in mammalian cells.