Estrogens are mitogenic in human breast cancer cells, but the presence of estrogen receptor alpha (ER alpha) is associated with a favorable prognosis in primary tumors and the molecular basis for this paradoxical relationship remains unknown. Here we show that ER alpha and ER alpha mutants devoid of ligand and DNA-binding domains inhibit cell growth in three-dimensional matrix as well as tumor formation in nude mice. Using in vitro and intracellular approaches, we have found that ER alpha, via its amino acids 184-283, interacts with cyclin-dependent kinase inhibitor p21(WAF1). Both proteins exhibit mutual interactions in the absence of estrogens or in the presence of pure antiestrogen ICI(182,780), whereas estradiol treatment disrupts their interactions. Cross-linking experiments reveal that these proteins are present in a larger complex of approximately 200 kDa that also contains cdk2 and cyclin E. We further demonstrate that the unliganded full-length ER alpha or the variant having the p21(WAF1) interaction region significantly increases p21(WAF1) expression, whereas ER alpha silencing reduces p21(WAF1) levels and silencing of p21(WAF1) is sufficient to prevent ER alpha-induced growth inhibition. Taken together, our results point to an antiproliferative function of the unliganded ER alpha through its physical interactions with p21(WAF1) that may also explain the favorable prognosis of ER alpha-positive breast cancers.