Steroid hormones are hydrophobic molecules that have a low solubility in aqueous solution, i.e., plasma. The liver produces several proteins that circulate in plasma and have varying affinities for different steroids. The steroids exist in plasma in equilibrium between the protein bound and the free forms where S = free steroid, P=unoccupied protein, and S  P = steroid protein complex as in the following figure:

The degree of binding of a steroid to a plasma protein depends on 1) the water solubility of the steroid; 2) the affinity of the protein for the steroid; and 3) the plasma concentration of the protein.

The principal steroid binding proteins in
plasma are albumin, corticosteroidbinding
globulin (CBG, transcortin) sex-hormone binding globulin (SHBG) which is also known as testosterone-estradiol-binding globulin (TeBG). SHBG is identical to androgen-bindingprotein (ABP), which is produced in the testis. SHBG binds testosterone with a higher affinity than it binds estradiol so an increase in SHBG in plasma will result in an increase in bound  testosterone, a decrease in free testosterone and a decrease in the ratio of free testosterone to free estradiol. The relative distributions of the principal steroid hormones between protein bound and free forms in plasma are summarized in the table to the right.

The concentration of a particular binding protein in plasma can vary as a function of physiological state. For example estradiol and thyroid hormone increase plasma concentrations of SHBG. Estradiol increases plasma SHBG by increasing production in the liver. More specifically, estradiol increases glycosylation of inactive SHBG to the active form. In disease states in which liver glycosylation of SHBG is increased, such as cirrhosis of the liver, plasma concentrations of SHBG are elevated resulting in increased binding of testosterone, decreased free plasma testosterone and a decrease in the ratio of free plasma testosterone to free plasma estradiol. In males, this shift
in the testosterone:estradiol ratio in favor
of estradiol leads to gynecomastia or enlargement of the breasts.