The basis for the differential repressive effects of antiestrogens on transactivation by estrogen receptor alpha (ER) remains incompletely understood. Here, we show that the full antiestrogen ICI182,780 and, to a lesser extent, the SERM raloxifene (Ral), induce accumulation of exogenous ER in a poorly soluble fraction in transiently transfected HepG2 or stably transfected MDA-MB231 cells and of endogenous receptor in MCF7 cells. ER remained nuclear in HepG2 cells treated with either compound. Replacement of selected hydrophobic residues of ER ligand binding domain helix 12 (H12) enhanced receptor solubility in presence of ICI182,780 or Ral. These mutations also increased transcriptional activity with Ral or ICI182,780 on reporter genes or on the endogenous estrogen target gene TFF1 in a manner requiring the integrity of the N-terminal AF1 domain. The antiestrogen-specific effects of single mutations suggest that they affect receptor function by mechanisms other than a simple decrease in hydrophobicity of H12, possibly due to relief from local steric hindrance between these residues and the antiestrogen side chains. Fluorescence anisotropy experiments indicated an enhanced regional stabilization of mutant ligand binding domains in presence of antiestrogens. H12 mutations also prevent the increase in bioluminescence resonance energy transfer between ER monomers induced by Ral or ICI182,780 and increase intranuclear receptor mobility in correlation with transcriptional activity in presence of these antiestrogens. Our data indicate that ICI182,780 and Ral locally alter the ER ligand binding structure via specific hydrophobic residues of H12 and decrease its transcriptional activity through tighter association with an insoluble nuclear structure.