Estrogen signaling is important in breast cancer development and progression. Mdm2, a negative regulator of the p53 tumor suppressor, is often over-expressed in estrogen receptor positive breast cancers. To study the role of Mdm2 in the estrogen-mediated breast cancer cell proliferation, we examined the effect of estrogen on the p53-Mdm2 pathway in estrogen receptor positive and p53 wild-type MCF-7 breast cancer cells. Estrogen-mediated increase in cell proliferation correlated with increased Mdm2, but no concomitant decrease in the p53 protein level. Blocking Mdm2 expression with inducible shRNA inhibited estrogen-mediated cell proliferation and colony formation in soft agar. Mdm2 knockdown in the presence of estrogen increased p21 and the percent of cells in the G1 phase. Interestingly, knockdown of p53 had no effect on the estrogen-mediated cell proliferation. Estrogen also up-regulated the Mdm2 protein levels in cells exposed to the DNA damaging agent, etoposide, and the Mdm2 inhibitor, Nutlin-3. In turn, estrogen inhibited etoposide- and Nutlin-3-induced transcription of puma, a pro-apoptotic p53 target gene, without changing the p53 protein levels or p53 recruitment to the chromatin. The decrease in puma gene transcription correlated with a decrease in Puma protein and an increase in Bcl-2 protein, an anti-apoptotic estrogen receptor target. Overall, our findings suggest that estrogen signals to an Mdm2-mediated pathway to provoke cell proliferation and that this pathway is associated with inhibition of the G1 checkpoint.