Epidemiological data demonstrated that hormone replace treatment has protective effect against colorectal cancer (CRC). Our previous studies showed that this effect may be associated with DNA mismatch repair. This study aims to investigate the mechanism of estrogen induction of MLH1, and whether colorectal tumor proliferation can be inhibited through induction of MLH1 by estrogen signal pathway. Human CRC cell lines were used to examine the regulation of MLH1 expression by over-expression and depletion of estrogen receptor-α (ERα) and estrogen receptor-β (ERβ), under the treatment with 17β-estradiol or β-Estradiol 6-(O-carboxy-methyl) oxime: BSA, followed by a real-time Q-PCR and Western blotting analysis. Luciferase reporter and chromatin immunoprecipitation assays were used to identify the estrogen response elements in the proximal promoter of MLH1 gene. Then, the influence of estrogen-induced MLH1 on CRC tumor growth were determined in vitro and in vivo. We found that mismatch repair ability and microsatellite stability of cells were enhanced by estrogen via induction of MLH1 expression, which was mediated by ERβ, through a transcriptional activation process. Furthermore, we identified that ERβ exerted an inhibitory effect on CRC tumor proliferation in vitro and in vivo, combined with 5-FU, through up-regulation of MLH1 expression. Finally, we concluded that estrogen enhances mismatch repair ability and tumor inhibition effect in vitro and in vivo, via induction of MLH1 expression mediated by ERβ.