A novel bacterial expression system that is capable of producing high levels of soluble, stable, biologically active human vitamin D3 and estrogen receptors has been developed. The method utilizes ubiquitin fusion technology and a low temperature nalidixic acid induction of the lambda PL promoter. This system can produce large quantities of receptor antigen, but only a small fraction displays wild-type DNA and hormone binding properties. Therefore, the use of this system to overproduce receptors for crystallization studies is not practical. To overcome these problems, a 2 um based ubiquitin fusion system which allows regulated expression of the estrogen receptor in yeast (Saccharomyces cerevisiae) was developed. This system produces the estrogen receptor to a level of 0.2% of the total soluble protein. Moreover, this protein is undegradable, soluble, and biologically active. To test the transcriptional activity of the estrogen receptor produced in yeast, a cis-trans transcription assay was developed. This assay revealed that the transcriptional activity of the human estrogen receptor expressed in yeast was similar to that observed in transfected mammalian cells. This reconstituted estrogen transcription unit in Saccharomyces cerevisiae was utilized to examine the regulation of estrogen receptor functions by antiestrogens, to develop a random and rapid approach for identifying novel estrogen response elements, to characterize estrogen receptor variants cloned from human breast tumors, and to examine the effect of estrogen receptor on the regulation of osteocalcin gene.