We have previously reported that astrocyte elevated gene-1 (AEG-1) was upregulated in human breast cancer. However, the biological function of AEG-1 in the development and progression of breast cancer remains to be clarified. In this study, we examined the effect of AEG-1 on cell proliferation and found that AEG-1 upregulation was significantly linked to increased Ki67 (P<0.001). Ectopic expression of AEG-1 in MCF-7 and MDA-MB-435 breast cancer cells dramatically enhanced cell proliferation and their ability of anchorage-independent growth, whereas silencing endogenous AEG-1 with shRNAs inhibited cell proliferation and colony-forming ability of the cells on soft agar. Furthermore, these proliferative effects were significantly associated with decreases of p27Kip1 and p21Cip1 two key cell-cycle inhibitors. Moreover, we further demonstrated that AEG-1 could downregulate the transcriptional activity of FOXO1 by inducing its phosphorylation through the PI3K/Akt signaling pathway. These observations were further confirmed in clinical human primary breast cancer specimens, in which high-level expression of AEG-1 was inversely correlated with the expression of FOXO1. Taken together, our results provide the first demonstration of a novel mechanism by which AEG-1 induces proliferation of breast cancer cell, and our findings suggest that AEG-1 might play an important role in tumorigenesis of breast cancer. © 2009 Macmillan Publishers Limited.