The kinase inhibitor p27Kip1 regulates the G1 cell cycle phase. Here, we present data indicating that the oncogenic kinase Src regulates p27 stability through phosphorylation of p27 at tyrosine 74 and tyrosine 88. Src inhibitors increase cellular p27 stability, and Src overexpression accelerates p27 proteolysis. Src-phosphorylated p27 is shown to inhibit cyclin E-Cdk2 poorly in vitro, and Src transfection reduces p27-cyclin E-Cdk2 complexes. Our data indicate that phosphorylation by Src impairs the Cdk2 inhibitory action of p27 and reduces its steady-state binding to cyclin E-Cdk2 to facilitate cyclin E-Cdk2-dependent p27 proteolysis. Furthermore, we find that Src-activated breast cancer lines show reduced p27 and observe a correlation between Src activation and reduced nuclear p27 in 482 primary human breast cancers. Importantly, we report that in tamoxifen-resistant breast cancer cell lines, Src inhibition can increase p27 levels and restore tamoxifen sensitivity. These data provide a new rationale for Src inhibitors in cancer therapy.