The estrogen receptor (ER), a member of the nuclear hormone receptor superfamily important in human physiology and disease, recruits coactivators which modify local chromatin structure. Here we describe effects of ER on large-scale chromatin structure as visualized in live cells. We targeted ER to gene-amplified chromosome arms containing large numbers of lac operator sites either directly, through a lac repressor-ER fusion protein (lac rep-ER), or indirectly, by fusing lac repressor with the ER interaction domain of the coactivator steroid receptor coactivator 1. Significant decondensation of large-scale chromatin structure, comparable to that produced by the approximately 150-fold-stronger viral protein 16 (VP16) transcriptional activator, was produced by ER in the absence of estradiol using both approaches. Addition of estradiol induced a partial reversal of this unfolding by green fluorescent protein-lac rep-ER but not by wild-type ER recruited by a lac repressor-SRC570-780 fusion protein. The chromatin decondensation activity did not require transcriptional activation by ER nor did it require ligand-induced coactivator interactions, and unfolding did not correlate with histone hyperacetylation. Ligand-induced coactivator interactions with helix 12 of ER were necessary for the partial refolding of chromatin in response to estradiol using the lac rep-ER tethering system. This work demonstrates that when tethered or recruited to DNA, ER possesses a novel large-scale chromatin unfolding activity.