Estrogen plays an important role in the proliferation and progression of breast cancer. The estrogen signal is mediated by the estrogen receptors (ERalpha and ERbeta). ERalpha (estrogen receptor alpha) is an important promoter of growth in breast cancer; however, the role of ERbeta (estrogen receptor beta) in breast cancer is less clear. In this study, using a yeast two-hybrid screening technique, we identified a novel ERbeta1-interacting protein, inhibitor of differentiation-1 (Id1), which is a dominant negative regulator of bHLH transcription factors, and promotes cell proliferation in breast cancer cells. Using mammalian two-hybrid protein-protein interaction assays, we found that the helix-loop-helix domain of the Id1 protein was essential for the physical interaction between ERbeta1 and Id1. In addition, we found that 17-beta estradiol inhibits ERbeta1 binding with Id1. Furthermore, we observed that ERbeta1 inhibited cell growth of MDA-MB-231 cells and upregulated p21 expression and that ERbeta1 up-regulation of p21 is Id1 dependent. Taken together, our study demonstrates a novel ERbeta1 binding partner, Id1, and a mechanism by which ERbeta1 inhibits breast cancer cell growth through binding with Id1 and upregulating p21 gene expression.