Two estrogen receptors (ERalpha and ERbeta) are found throughout the mammary gland. Evidence indicates that, while ERalpha transduces proliferation signals, ERbeta opposes this effect and is necessary for epithelial differentiation. Using mouse mammary epithelial cells, we have previously shown that activation of ERbeta opposes ERalpha-induced proliferation and increases apoptosis. Furthermore, stable knockdown of ERbeta resulted in loss of growth contact inhibition. In this work, we report that loss of ERbeta is associated with a decrease of E-cadherin protein levels through different posttranscriptional regulatory mechanisms. Ligand activation of ERalpha induced E-cadherin extracellular shedding and internalization only in the absence of ERbeta, followed by lysosomal degradation. Loss of ERbeta also led to an increase of E-cadherin uptake in a ligand-independent manner through mechanisms that required caveolae formation. Proteasome activity was necessary for both mechanisms to operate. Increased E-cadherin internalization correlated with the up-regulation of beta-catenin transcriptional activity and impaired morphogenesis on Engelbreth-Holm-Swarm matrix. Taken together, these results emphasize the role of epithelial ERbeta in maintaining cell adhesion and a differentiated phenotype and highlight the potential importance of ERbeta for the design of specific agonists for use in breast cancer therapy.