Annexin V is a Ca2+-dependent phospholipid binding protein. Although it has been shown to inhibit protein kinase C (PKC) in cell-free systems, its role in the intact cell is unclear. A stable MCF-7 human breast cancer cell overexpression system was established to investigate the function of annexin V. In these cells, 12-O-tetradecanoylphorbol-13-acetate (TPA)-induced phosphorylation and kinase activity of ERK1/2 were suppressed. Morphological changes induced by TPA were reduced by annexin V overexpression as well as by the pan-PKC inhibitor, bisindolylmaleimide I, and by the mitogen-activated protein kinase/extracellular signal-regulated kinase kinase (MEK) inhibitor, PD98059. TPA-induced MEK1/2 and Raf-1 phosphorylation were reduced in these cells. The TPA-enhanced active Ras, and its association with Raf-1, were reduced. TPA treatment of MCF-7 cells caused an increased association of Shc with Grb2. However, this increased association was prevented in the annexin V-overexpressors. p21WAF/CIP1 is responsible for inhibition of cell cycle progression in MCF-7 cells. TPA induced the expression of p21WAF/CIP1 to a greater extent in MCF-7 parent and control plasmid cells than in annexin V overexpressors. PD98059 inhibited this increase, suggesting that TPA upregulation of p21WAF/CIP1 occurs via the MEK pathway, and that annexin V overexpression blunts it. This work shows that annexin V overexpression suppresses the TPA-induced Ras/ERK signaling by inhibiting at/or upstream of Shc, possibly through the inhibition of PKCs. Oncogene (2000).