From the Honduran border, you can take a bus to Ocotal, then from Ocotal to Esteli.
From the south, there are frequent buses from Managua and other points. Buses from Managua every 30 minutes.
From León : Also expressos , (a regular one leaves about 9.30AM from the north terminal).
There are two bus stations both on the Pan American about 100m from each other. The southern is smaller and better organised but more buses come and go from the north. Most main destinations are served by both though so you will need to check both for times etc.
Both stations are a little out of the main town (C$15-C$20 in collectivo to the Parque Central 2007). You could try a long dusty walk along the Pan American turning left at the only set of traffic lights on the road until you bump into the main south/north route to the plaza.
Local buses (C$3 to any destination) and share taxis (C$8 in the central area and no more C$20 within the city, agree on the price before you get in). You can easily walk around the city center.
Lots of beautiful murals in various places around town.
Visit Miraflor, an agricultural cooperative a couple of hours outside of Esteli in the mountains. There are a number of places at Miraflor where you can stay in cabins or with families, ride horses, meet farmers, looks at orchids, etc. Visit Hospedaje Luna (below) for more information. Dona Corina's place is well liked; a bed and 3 meals a day costs US$15 in a family house and 20 USD in a cabana.
Tisey is a nature preserve just south of Esteli. Take a city bus to the hospital, and then a local bus up the mountain or catch the bus to Tisey at the Cotran Sur on the Pan American highway. On the way up, you can stop in Estanzuela and see a waterfall. The water looks too dirty for swimming and there's lots of garbage everywhere (Nov 2007). But worth the trip.
Further up the road is La Garnacha, a community consisting mostly of organic farmers plus a factory of some amazingly good cheese. To visit, you need to get off the bus at the La Garnacha sign and walk up their road about 2km. From there, if you are still up for a hike, you can walk to and climb up Cerro Apaguají. It is on private property but open to the public. It's about another 1km of hike from La Garnacha. From the cerro you can see Lake Managua to the south, the chain of volcanos along the Pacific and, on a clear day, part of El Salvador on the other side of the Gulf of Fonseca.
Learn Spanish: There are several Spanish schools around town. When foreign volunteers would come to Esteli to help the Sandinistas they would often study in Esteli. Escuela Horizonte  is a respectable one : $220 a week for 3.5 hours of instruction, excursions and homestay with a local family including 3 meals a day (at least two of which will be gallo pinto; and beware of the local queso, it's not too popular among foreigners).
The Esteli region is also home to many fine cigar companies, most of whom will allow a prearranged tour, and some of whom offer special package tours of their factories (Drew Estate, in particular).
There is a public market in the south end of town. Easy to find or just ask. Just north of that market are lots of leather shops. Good stuff at good prices. For example, you can probably get a custom made pair of boots for around US$50.
Cafe Luz, (Across the street from Hospedaje Luna). Excellent local and international food at reasonable prices in a great environment with friendly staff.
Mocha Nana Cafe, (On the south side of the street just west of the intersection of Calle Transversal and the Pan-American Highway.). Brilliant waffles, bagels, batidas, and good coffee. Also English books for sale or trade.
Rincon Legal is the most interesting bar in Esteli, a huge space filled with old Sandinista propaganda posters and memorabilia. The owner is an interesting character. It's in the south of the city, around 9e or 10e Calle west. They have great concerts from time to time.
Los Semaforos - Best weekend dance venue, Rancho bar, made of palm roof stylee, great live music, watch out for "Cafe", young group, mixed age clientelle, good disco imbetween live music. Thurs through Sun.
El Chaiman - Best locals venue, no entry fee, great Kumbia group, Zeta Eme (ZM), at weekends and disco. All a bit like a busy wedding party.
Zona Cero - Well known Karaoke bar, open all week. Try Ranchero or Abba.
Rancho Legal - Set at the old Rancho Santa Elena, up by the Torre, varied bands and nice rustic furnishings, part of Rincon Legal.
Axsis - Formerly the legendary Studio 54, fairly central on the Pan Am, much of the same beautiful people dancing reggaeton and Donna Summa. Karaoke inside too.
Casino Las Vegas - Near market on calle central. Packed small Karaoke bar, with cheesy carpets, sponge-painted Vegas surrounds the serious singers, smoke filled atmosphere that parties until dawn.
Cafe Luz, (Opposite Hostel Luna. One block from El Meson hotel). Great evening atmosphere with really excellent, well priced food, local rum and Mojitos to challenge Cuba. Cold local Beers and good Chilean wines too. Often has local musicians entertaining. * ' -
Hotel Nicarao, (on the east side of the main street a couple blocks south of the Parque Central). Beautiful, clean hotel with simpatico staff, rooms are arranged around a central garden with tropical birds and a friendly duck. Double with private bath and TV: US$17.50, single with shared bath, and no TV: C$150.
Hospedaje Luna, (from the back of the cathedral, it's only 1 block north on the left hand side), . A new place with clean dorms and a few single rooms: clean, fresh, attractive and fun, with central garden, hammock and seating area, cable TV lounge and movies for all, with the cheapest rates for backpackers, couples and group, the dorms at only C$99 cords ($5) per person, good place to meet other travellers, and get information in English and Spanish. Has hot water, laundry facilities, free organic coffee and teas, bike hire, cigar factory tours, live music nights out tours, and more. Has its own excellent international restaurant across the road, Cafe Luz, open all day.