Objective: To identify the effects of percutaneous estradiol (E2) implants on bone histology and bone mass of postmenopausal women with low bone mineral density. Methods: Sixteen postmenopausal women with low bone mineral density were treated with 75-mg E2 implants. Each had iliac crest bone biopsies performed, following double-tetracycline labeling, before treatment and 1 year later. Dual energy x-ray absorptiometry of the lumbar spine and proximal hip was also performed before and after 1 year of therapy. Serum E2 and FSH were measured after 1 year. Results: There were significant reductions in the osteoid volume, osteoid surface, eroded surface, and activation frequency following treatment. There was a statistically insignificant increase in the median bone volume from 11.3 to 15.8%. The median percentage increase in bone density at the lumbar spine was 14.4% and at the total hip 5.3%. The median post-treatment serum E2 level was 570 pmol/L. Conclusions: Estradiol implants reduce bone turnover in the iliac crest without significantly increasing trabecular bone volume after 1 year. The increases in bone density at the spine and hip may be explained by increased mineralization within the existing trabecular bone. However, the iliac crest may not represent the effect of estrogen at sites susceptible to osteoporotic fracture. If resorption is suppressed more than formation, then new bone would be deposited to account for the increases in bone density.