Elevated levels of estradiol enhance learning in mammals, including humans, likely a result of hormone-induced heightened plasticity at CA3-CA1 synapses. The increase in long-term potentiation (LTP) magnitude is considered to be a consequence of the estradiol-induced increase in dendritic spine density and NMDA receptor (NMDAR)-mediated transmission; however, direct evidence linking these changes together is lacking. Alternatively, alterations in GABAergic inhibition or presynaptic release probability could contribute. Here, we show in time course studies using hippocampal slices from estradiol-treated ovariectomized rats that the LTP magnitude is increased only when spine density is increased simultaneously with an increase in NMDAR transmission relative to AMPA receptor (AMPAR) transmission, with no role for alterations in GABAergic inhibition or release probability. With time after hormone treatment, AMPAR transmission gradually increases during the maintained increase in spine density and NMDAR transmission. Eventually, the balance between NMDAR and AMPAR transmission is reestablished, and the LTP magnitude is no longer increased. Blocking genomic estrogen receptors prevents the heightened spine density, NMDAR transmission, and LTP magnitude, suggesting a tight mechanistic coupling between these morphological and functional changes. Thus, we propose that the hormone-induced increase in functional synapse density alone is not sufficient to support heightened plasticity. Rather, estradiol increases LTP via enhancing NMDAR transmission, likely through receptor insertion into newly formed or preexisting synapses. Later, when excitability in the circuit is at its highest and spine density remains elevated, the LTP magnitude is no longer increased, probably as a consequence of the delayed increase in AMPAR transmission that resets the balance between NMDAR and AMPAR transmission.