The two isoforms of the nuclear estrogen receptor, ERα and ERβ are widely expressed in the central nervous system. Although they were first described as nuclear receptors, both isoforms have also been found at the cell membrane where they mediate cell signaling. Surface biotinylation studies using neuronal and glial primary cultures label an alternatively spliced form of ERα. The 52 kDa protein, ERαΔ4, is missing exon 4 and is highly expressed in membrane fractions derived from cultured cells. In vivo, both full‐length (66 kDa) ERα and ERαΔ4 are present in membrane fractions. In response to estradiol, full‐length ERα and ERαΔ4 are initially trafficked to the membrane, and then internalized in parallel. Previous studies determined that only the full‐length ERα associates with metabotropic glutamate receptor‐1a (mGluR1a), initiating cellular signaling. The role of ERαΔ4, remained to be elucidated. Here, we report ERαΔ4 trafficking, association with mGluR2/3, and downstream signaling in female rat arcuate nucleus (ARH). Caveolin (CAV) proteins are needed for ER transport to the cell membrane, and using co‐immunoprecipitation CAV‐3 was shown to associate with ERαΔ4. CAV‐3 was necessary for ERαΔ4 trafficking to the membrane: in the ARH, microinjection of CAV‐3 siRNA reduced CAV‐3 and ERαΔ4a in membrane fractions by 50%, and 60%, respectively. Moreover, co‐immunoprecipitation revealed that ERαΔ4 associated with inhibitory mGluRs, mGluR2/3. Estrogen benzoate (EB) treatment (5 μg; s.c.; every 4 days; three cycles) reduced levels of cAMP, an effect attenuated by antagonizing mGluR2/3. Following EB treatment, membrane levels of ERαΔ4 and mGluR2/3 were reduced implying ligand‐induced internalization. These results implicate ERαΔ4 in an estradiol‐induced inhibitory cell signaling in the ARH.