The molecular mechanisms by which the phytohormone auxin coordinates cell division with cell growth and differentiation are largely unknown. Here, we show that in Arabidopsis thaliana E2FB, accumulation and stability are positively regulated by auxin. Coexpression of E2FB, but not of E2FA, with its dimerization partner A, stimulated cell proliferation in the absence of auxin in tobacco (Nicotiana tabacum) Bright Yellow-2 cells. E2FB regulated the entry into both S- and M-phases, the latter corresponding to the activation of a plant-specific mitotic regulator, CDKB1;1. Increased E2FB levels led to shortened cell cycle duration, elevated cell numbers, and extremely small cell sizes. In the absence of auxin, cells elongated with concomitant increase in their ploidy level, but both were strongly inhibited by E2FB. We conclude that E2FB is one of the key targets for auxin to determine whether cells proliferate or whether they exit the cell cycle, enlarge, and endoreduplicate their DNA.