Estrogen receptors (ER) regulate transcription by interacting with regulatory elements in target genes. However, known ER regulatory elements cannot explain the expression profiles of genes activated by estradiol (E₂) and selective estrogen receptor modulators (SERMs). We previously showed that the killer cell lectin-like receptor (NKG2E) gene is regulated by estradiol, tamoxifen and raloxifene. Here we used the NKG2E gene as a model to investigate the mechanism whereby target genes are regulated by estradiol and SERMs with ER. The ER regulatory element in the NKG2E promoter was mapped to -1825 and -1686 region. Full activation of the NKG2E promoter required the collaboration between a transcription factor cluster containing c-jun, HSF-2 and C/EBP, and a unique variant estrogen response element (ERE) that has only a two nucleotide spacer between half sites. The cluster elements and the variant ERE were inactive on their own, but the regulation by E₂ and SERMs was restored when the c-jun, HSF-2 and C/EBP cluster was placed upstream of the variant ERE. The activation of the NKG2E gene by estradiol and selective estrogen receptor modulators was associated with the recruitment of the p160 coactivators, GRIP1 and AIB1, but not SRC-1. These studies identified one of the most complex ER regulatory units thus far reported, and demonstrate that a cluster of flanking transcription factors collaborate with ER to induce a functional ERE in the NKG2E promoter.