Activin is a member of the transforming growth factor beta superfamily that regulates mammary cell function during development, lactation, and in cancer. Activin slows the growth of breast cancer cells by inducing G(0)/G(1) cell cycle arrest. Estrogen is a steroid hormone that stimulates the proliferation of mammary epithelial cells in development and oncogenesis. The crosstalk between estrogen and activin that regulates activin ligand expression, activin and estrogen signal transduction, and cell cycle arrest was investigated in this study. Estrogen antagonized activin-dependent production of plasminogen activator inhibitor 1 (PAI-1) mRNA, while activin repressed estrogen-dependent transcription of trefoil factor 1. The repression of estrogen signaling by activin was recapitulated using a simple estrogen response element-luciferase construct and was enhanced in the presence of overexpressed estrogen receptor alpha (ERalpha). In contrast, estrogen-mediated repression of activin signaling could not be recapitulated on a simple CAGA Smad-binding element but did inhibit the short PAI-1 promoter, p3TP-luciferase, especially when ERalpha was overexpressed. Repression of both estrogen- and activin-regulated transcription was found to be ligand induced and Smad3 dependent. In addition to transcriptional repression, estrogen also reduced the amount of activin B mRNA and protein produced by MCF7 breast cancer cells. These studies demonstrate the importance of activin and estrogen crosstalk during mammary cell growth and cancer initiation.