GAL4.estrogen receptor.VP16 (GAL4.ER.VP16), which contains the GAL4 DNA-binding domain, the human ER hormone binding (AF-2) domain, and the VP16 activation domain, functions as a hormone-dependent transcriptional activator in yeast (Louvion, J.-F., Havaux-Copf, B., and Picard, D. (1993) Gene (Amst.) 131, 129-134). Previously, we showed that this activator can remodel chromatin in yeast in a hormone-dependent manner. In this work, we show that a weakened VP16 activation domain in GAL4.ER.VP16 still allows hormone-dependent chromatin remodeling, but mutations in the AF-2 domain that abolish activity in the native ER also eliminate the ability of GAL4.ER.VP16 to activate transcription and to remodel chromatin. These findings suggest that an important role of the AF-2 domain in the native ER is to mask the activation potential of the AF-1 activation domain in the unliganded state; upon ligand activation, a conformational change releases AF-2-mediated repression and transcriptional activation ensues. We also show that the AF-2 domain, although inactive at simple promoters on its own in yeast, can enhance transcription by the MCM1 activator in hormone-dependent manner, consistent with its having a role in activation as well as repression in the native ER.