beta2-Chimerin is a member of the "non-protein kinase C" intracellular receptors for the second messenger diacylglycerol and the phorbol esters that is yet poorly characterized, particularly in the context of signaling pathways involved in proliferation and cancer progression. beta2-Chimerin possesses a C-terminal Rac-GAP (GTPase-activating protein) domain that accelerates the hydrolysis of GTP from the Rac GTPase, leading to its inactivation. We found that beta2-chimerin messenger levels are significantly down-regulated in human breast cancer cell lines as well as in breast tumors. Adenoviral delivery of beta2-chimerin into MCF-7 breast cancer cells leads to inhibition of proliferation and G(1) cell cycle arrest. Mechanistic studies show that the effect involves the reduction in Rac-GTP levels, cyclin D1 expression, and retinoblastoma dephosphorylation. Studies using the mutated forms of beta2-chimerin revealed that these effects were entirely dependent on its C-terminal GAP domain and Rac-GAP activity. Moreover, MCF-7 cells stably expressing active Rac (V12Rac1) but not RhoA (V14RhoA) were insensitive to beta2-chimerin-induced inhibition of proliferation and cell cycle progression. The modulation of G(1)/S progression by beta2-chimerin not only implies an essential role for Rac in breast cancer cell proliferation but also raises the intriguing possibility that diacylglycerol-regulated non-protein kinase C pathways can negatively impact proliferation mechanisms controlled by Rho GTPases.