In human Estrogen Receptor alpha (ERalpha)-positive breast cancers, 5' end dense methylation of the estrogen-regulated pS2/TFF1 gene correlates with its transcriptional inhibition. However, in some ERalpha-rich biopsies, pS2 expression is observed despite the methylation of its TATA-box region. Herein, we investigated the methylation-dependent mechanism of pS2 regulation.We observed interplay between Methyl-CpG Binding Domain protein 2 (MBD2) transcriptional repressor and ERalpha transactivator: (i) the pS2 gene is poised for transcription upon demethylation limited to the enhancer region containing the estrogen responsive element (ERE); (ii) MBD2-binding sites overlapped with the methylation status of the pS2 5' end; (iii) MBD2 depletion elevated pS2 expression and ectopic expression of ERalpha partially overcame the inhibitory effect of MBD2 when the ERE is unmethylated. Furthermore, serial chromatin immunoprecipitation assays indicated that MBD2 and ERalpha could simultaneously occupy the same pS2 DNA molecule; (iv) concomitant ectopic ERalpha expression and MBD2 depletion resulted in synergistic transcriptional stimulation, while the pS2 promoter remains methylated.MBD2 and ERalpha drive opposite effects on pS2 expression, which are associated with specific steady state levels of histone H3 acetylation and methylation marks. Thus, epigenetic silencing of pS2 could be dependent on balance of the relative intracellular concentrations of ERalpha and MBD2.