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Hippocampal function is essential for the acquisition, consolidation, and retrieval of spatial memory. High circulating levels of glucocorticoids (GCs), the adrenal steroid hormones secreted during stress, have been shown to impair both acquisition and retrieval and can either impair or enhance consolidation, depending on experimental conditions. In contrast, estrogen can enhance spatial memory performance and can block the deleterious effects of GCs on such performance. We therefore constructed a chimeric gene ("ER/GR") containing the hormone-binding domain of the GC receptor and the DNA binding domain of the estrogen receptor; as a result, ER/GR transduces deleterious GC signals into beneficial estrogenic ones. We show here that acute immobilization stress, before acquisition and retrieval phases, increases latencies for male rats in a hidden platform version of the Morris water maze. This impairment is blocked by hippocampal expression of the ER/GR transgene. ER/GR expression also blocks decreases in platform crossings caused by acute stress, either after acquisition or before retrieval. Three days of stress before acquisition produces an estrogen-like enhancement of performance in ER/GR-treated rats. Moreover, ER/GR blocks the suppressive effects of GCs on expression of brain-derived neurotrophic factor (BDNF), a growth factor central to hippocampal-dependent cognition and plasticity, instead producing an estrogenic increase in BDNF expression. Thus, ER/GR expression enhances spatial memory performance and blocks the impairing effects of GCs on such performance.