Estrogen signaling occurs through at least two distinct molecular pathways: (i) direct binding of liganded estrogen receptors (ERs) to estrogen-responsive DMA elements (EREs) (the "ER ERE pathway") and (ii) indirect recruitment of liganded ERs to activating protein-1 (AP-1)-responsive DMA elements via heterodimers of Fos and Jun (the "ER AP-1 pathway"). We have developed a biochemical assay for examining ligand-regulated transcription by ERs in the ER/AP-1 pathway. This assay recapitulates the altered (i.e., agonistic) pharmacology of selective estrogen receptor modulator drugs in this pathway reported previously by using various cell-based assays. We used our biochemical assay to examine the detailed mechanisms of ER/AP-1-dependent transcription. Our studies indicate that (i) ERα AP-1 complexes play a critical role in promoting the formation of stable RNA polymerase II preinitiation complexes leading to transcription initiation, (ii) chromatin is a key determinant of estrogen and selective estrogen receptor modulator signaling in the EIRα, AP-1 pathway, (iii) distinct domains of ERα are required for recruitment to DMA-bound Fos/Jun heterodimers and transcriptional activation at AP-1 sites, and (iv) different enhancer/activator combinations in the ERα and AP-1 pathways use coactivators in distinct ways. These studies have increased our understanding of the molecular mechanisms underlying ligand-dependent signaling in the ER/AP-1 pathway and demonstrate the usefulness of this biochemical approach.