Recent in vitro studies have found that astrocytes exert powerful control over the number of neuronal synapses, leading us to consider why glia can exert this control and what the underlying mechanism(s) may be. To understand the potential possibility, we studied the formation of synapses and synaptic function in primary rat cortical neurons. We found that primary cultured neonatal rat cortical astrocytes modulate synaptogenesis and synaptic function through producing and secreting estradiol into culture medium. The concentration of estradiol produced by pure cultured astrocytes increased in correspondence with the days of culture and the number of proliferating astrocytes, which peaked at 266+/-22 ng/l around day 14 of culture. When astrocyte-conditioned medium (ACM) was added into pure cultured cortical neurons, the number of synapses formed between cortical neurons increased by nearly sixfold. The mean frequency and the amplitude of mini-postsynaptic currents (mPSCs) increased from 13+/-4 events/min and 20.5+/-2 pA to 73+/-16 events/min and 29.1+/-3 pA, respectively. In the meantime, the level of estrogen receptor-alpha (ER-alpha) expressed on neonatal rat cortical neurons was significantly up-regulated. Moreover, the effect of ACM on synaptic formation and transmission was blocked by tamoxifen (estrogen receptor antagonist) in culture. After the treatment of tamoxifen, the number of synapses on neurons decreased from 79+/-9 to 32+/-3. The mean amplitude and frequency of mPSCs were also dropped to 24.5+/-2 pA and 35+/-10/min, respectively. Unexpectedly, exogenic estradiol can mimic the effect of ACM on synaptic formation and transmission. Finally, to understand whether astrocyte-derived estradiol regulates the synaptic transmission via presynapse, the release of presynaptic vesicle from neuron was monitored by FM 4-64 assay. The results showed that when ACM or exogenic estradiol was added into neurons, the kinetics of vesicle release speed are similar to that of neuronal cultured with astrocytes, which were faster than that of just pure neuronal cultures. These observations suggest that estrogen synthesized and secreted by astrocytes can regulate synapse formation and synaptic transmission.