Kruppel-like factor 5 (KLF5) is implicated in human breast cancer by frequent genomic deletion and expressional deregulation, but the molecular mechanisms by which KLF5 affects breast tumorigenesis are still unknown. This study was conducted to examine whether and how KLF5 affects the function of estrogen receptor (ER) in breast cancer cells. Using different cell lines, we found that restored expression of KLF5 inhibited estrogen-promoted cell proliferation in ER-positive MCF-7 and T-47D cell lines but had no effect on ER-negative SK-BR-3 cells. Transcriptional activity of ER was also suppressed by KLF5, as detected by using estrogen-stimulated ER responsive element-mediated reporter assay and expression analysis of ER target genes including c-MYC and Cathepsin D (CSTD). Chromatin immunoprecipitation assays showed that KLF5 inhibited ERalpha binding to the promoter of c-myc and CSTD. Furthermore, estrogen induced an interaction between KLF5 and ERalpha. These results suggest that KLF5 inhibits the function of ERalpha in gene regulation and cell proliferation through protein interaction that interrupts the binding of ERalpha to target gene promoters to prevent target gene induction.