Estrogen may be involved in schizophrenia by inhibiting serotonin-1A (5 HT1A) receptor function, which is implicated in the pathophysiology of this illness. We examined the effects of estrogen pre-treatment on modulation of loudness dependence of the auditory evoked potential (LDAEP) and mismatch negativity (MMN) by the 5 HT1A receptor partial agonist, buspirone. Using a double-blind, placebo-controlled, repeated-measures design, in 16 healthy female volunteers, we observed that treatment with buspirone resulted in a significant increase of LDAEP slope, likely by inhibiting 5-HT function. Estrogen increased LDAEP slope on its own, and blocked a further increase by buspirone. Similar results were observed for MMN, where buspirone caused a small, but significant increase of latency, although not amplitude, after placebo pre-treatment. This effect was not seen after estrogen pre-treatment, which enhanced MMN latency on its own. These results are in line with our previous findings on prepulse inhibition which also showed an inhibitory effect of estrogen on the action of buspirone. Taken together, these data suggest that estrogen inhibits 5 HT1A receptor-mediated disruptions of auditory processing.