In addition to its effects on sexual differentiation and reproduction, estrogen has important impact on the immune system and on bone. It has also been evident that the effects of estrogen on bone to a large extent are mediated via its action on immune cells. Estrogen has a dichotomous impact on the immune system by downregulation of inflammatory immune responses but simultaneous upregulation of immunoglobulin production. Consequently, immune-mediated diseases in humans and in animal models are modulated by estrogen. Estrogen deficiency after ovariectomy in mice and after menopause in women is associated with significant bone loss. In rheumatic diseases such as rheumatoid arthritis (RA), osteoporosis is frequent, and in patients with postmenopausal RA, the degree of bone loss is dramatically increased. Hormone replacement therapy (HRT) in murine and human arthritis has beneficial effects on bone loss, as expected, but it also ameliorates inflammation and inflammation-triggered joint destruction. Long-term use of HRT has been associated with increased risk of breast cancer, thrombosis, and possibly also stroke. Accordingly, there is great need for new activators of estrogen receptors (ERs) selectively reproducing only the beneficial effects of estrogen. To achieve this aim, better knowledge of the mechanisms of how activation of ER-alpha and ER-beta modulates the immune system and bone at the cellular and molecular levels is necessary.