The role of estrogen receptor beta (ERβ) in breast cancer is unclear. ERβ is considered to have a protective role in breast cancer development based on findings demonstrating that ERβ expression inhibits ERα-mediated proliferation of breast cancer cells. We previously demonstrated that ERβ causes a ligand independent G2 cell cycle arrest in MCF-7 cells. To study the mechanisms of the ERβ-mediated G2 cell cycle arrest, we investigated its effects on the regulatory pathways responsible for the G2/M phase transition. We found that ERβ inhibits CDK1 activity, which is the critical determinant of the G2/M progression. CDK1 activity is modulated by both stimulatory and inhibitory factors. Cyclin B1 is the major activator of CDK1. ERβ inhibited the cell cycle-dependent stimulation of cyclin B1 mRNA and protein. GADD45A and BTG2 are two major inhibitors of CDK1, which have been implicated in breast tumor formation. Based on these findings, we explored if the expression pattern of GADD45A and BTG2 is affected by ERβ. We found that ERβ stimulates GADD45A and BTG2 mRNA levels. The induction of these two genes is caused by ERβ binding directly to these genes and recruiting c-jun and NCOA2. Our findings demonstrated that unliganded ERβ causes a G2 cell cycle arrest by inactivating CDK1 through the repression of cyclin B1 and stimulation of GADD45A and BTG2 expression. These results provide evidence that drugs that stimulate the production of unliganded ERβ may be effective new therapies to prevent breast cancer.