Estrogens bind to two nuclear estrogen receptor (ER) subtypes, ERα and ERβ, which are expressed in differing amounts in various tissues. The endogenous estrogen, 17β-estradiol (E2), binds to both subtypes with nearly equal affinity and is the prototypical agonist. Selective estrogen receptor modulators (SERMs) may bind to both subtypes with equivalent affinities but have agonist activities in some tissues while having antagonist activities in others. In the present study, we demonstrate that the first reported endogenous SERM, 27-hydroxycholesterol (27-OHC), binds preferentially (>100-fold) to ERβ over ERα. Furthermore, 27-OHC is not able to fully compete with E2 binding, suggesting the two may bind at different sites. We provide an allosteric ternary complex model for the simultaneous binding of 27-OHC and E2 to ERβ, which accurately describes the binding data we have observed. We conclude that 27-OHC is a negative allosteric modifier of E2 binding, with an inhibitor constantof 50 nM and cooperativity factor (α) of 0.036. We also propose an in silico three-dimensional model of the simultaneous binding to guide future experiments. Further study of this unique binding model may allow for the discovery of novel ERβ-selective ligands and potentially explain the lack of effectiveness of ERβ-selective agonists in humans vs preclinical models.