Estradiol (E 2 ) regulates a wide range of neural functions, many of which require activation of estrogen receptor ␣ (ER␣) and/or ER, ligand-gated transcriptional regulators. Surprisingly, very few neural gene targets of ERs have been identified, and these cannot easily explain the myriad effects of E 2 . GABA regulates most of the same neural functions as E 2 , and GABAergic neurons throughout the brain contain ER. Therefore, we examined whether E 2 directly regulates expression of glutamic acid decarboxylase 2 (gad2), the enzyme primarily responsible for GABA synthesis for synaptic release. Using dual luciferase assays, we found that E 2 , but not other gonadal steroids, stimulated the activity of a 2691 bp rat gad2 promoter reporter construct. Activation required either ER␣ or ER, and ER did not repress ER␣-mediated transactivation. Site-directed mutagenesis studies identified three estrogen response elements (EREs) with cell-specific functions. An ERE at Ϫ711 upstream of the gad2 translational start site was essential for transactivation in both MCF-7 breast cancer cells and SN56.B5.G4 neural cells, but an ERE at Ϫ546 enhanced transcription only in neural cells. A third ERE at Ϫ1958 was inactive in neural cells but exerted potent transcriptional repression in E 2 -treated MCF-7 cells. Chromatin immunoprecipitation assays in mouse GABAergic N42 cells confirmed that E 2 induced ER␣ binding to a DNA fragment containing sequences corresponding to the Ϫ546 and Ϫ711 EREs of the rat promoter. Based on these data, we propose that direct transcriptional regulation of gad2 may explain, at least in part, the ability of E 2 to impact such a diverse array of neural functions.