Smad3, a component of the TGFβ signaling pathway, contributes to G1 arrest in breast cancer cells. Overexpression of the cell cycle mitogen, cyclin E, is associated with poor prognosis in breast cancer, and cyclin E/CDK2 mediated phosphorylation of Smad3 has been linked with inhibition of Smad3 activity. We hypothesized that the biological aggressiveness of cyclin E overexpressing breast cancer cells would be associated with CDK2 phosphorylation and inhibition of the tumor suppressant action of Smad3. Expression constructs containing empty vector, wild type (WT) Smad3, or Smad3 with CDK phosphorylation site mutations were co-transfected with a Smad3-responsive reporter construct into parental, vector control (A1), or cyclin E overexpressing (EL1) MCF7 cells. Smad3 function was evaluated by luciferase reporter assay and mRNA analysis. The impact of a Cdk2 inhibitor and cdk2 siRNA on Smad3 activity was also assessed. Cells expressing Smad3 containing mutations of the CDK phosphorylation sites had higher p15 and p21 and lower c-myc mRNA levels, as well as higher Smad3-responsive reporter activity, compared with controls or cells expressing WT Smad3. Transfection of cdk2 siRNA resulted in a significant increase in Smad3-responsive reporter activity compared with control siRNA; reporter activity was also increased after the treatment with a Cdk2 inhibitor. Thus, cyclin E-mediated inhibition of Smad3 is regulated by CDK2 phosphorylation of the Smad3 protein in MCF7 cells. Inhibition of CDK2 may lead to restoration of Smad3 tumor suppressor activity in breast cancer cells, and may represent a potential treatment approach for cyclin E overexpressing breast cancers.