Working memory is a cognitive function that is affected by aging and disease. To better understand the neural substrates for working memory, the present study examined the influence of estradiol on working memory using functional magnetic resonance imaging. Pre-menopausal women were tested on a verbal n-back task during the early (EF) and late follicular (LF) phases of the menstrual cycle. Although brain activation patterns were similar across the two phases, the most striking pattern that emerged was that estradiol had different associations with the two hemispheres. Increased activation in left frontal circuitry in the LF phase was associated with increased estradiol levels and decrements in working memory performance. In contrast, increased activation in right hemisphere regions in the LF phase was associated with improved task performance. The present study showed that better performance in the LF than the EF phase was associated with a pattern of reduced recruitment of the left-hemisphere and increased recruitment of the right-hemisphere in the LF compared to EF phase. We speculate that estradiol interferes with left-hemisphere working-memory processing in the LF phase, but that recruitment of the right hemisphere can compensate for left-hemisphere interference. This may be related to the proposal that estradiol can reduce cerebral asymmetries by modulating transcallosal communication (Hausmann, 2005).