Although glucocorticoids suppress proliferation of many cell types and are used in the treatment of certain cancers, trials of glucocorticoid therapy in breast cancer have been a disappointment. Another suggestion that estrogens may affect glucocorticoid action is that the course of some inflammatory diseases tends to be more severe and less responsive to corticosteroid treatment in females. To date, the molecular mechanism of cross-talk between estrogens and glucocorticoids is poorly understood. Here we show that, in both MCF-7 and T47D breast cancer cells, estrogen inhibits glucocorticoid induction of the MKP-1 (mitogen-activated protein kinase phosphatase-1) and serum/glucocorticoid-regulated kinase genes. Estrogen did not affect glucocorticoid-induced glucocorticoid receptor (GR) nuclear translocation but reduced ligand-induced GR phosphorylation at Ser-211, which is associated with the active form of GR. We show that estrogen increases expression of protein phosphatase 5 (PP5), which mediates the dephosphorylation of GR at Ser-211. Gene knockdown of PP5 abolished the estrogen-mediated suppression of GR phosphorylation and induction of MKP-1 and serum/glucocorticoid-regulated kinase. More importantly, after PP5 knockdown estrogen-promoted cell proliferation was significantly suppressed by glucocorticoids. This study demonstrates cross-talk between estrogen-induced PP5 and GR action. It also reveals that PP5 inhibition may antagonize estrogen-promoted events in response to corticosteroid therapy.