It is currently known that estrogen plays an important role in breast cancer (BC) development, but the underlying molecular mechanism remains to be elucidated. Accumulating evidence has revealed important roles of microRNAs in various kinds of human cancers, including BC. In this study, we found that among the microRNAs regulated by estrogen, miR-124 was the most prominent downregulated miRNA. miR-124 was downregulated by estradiol (E2) treatment in estrogen receptor (ER) positive BC cells, miR-124 overexpression suppressed cell proliferation, migration and invasion in BC cells; while the suppression of miR-124 using Anti-miR-124 inhibitor had opposite cellular functions. Under the E2 treatment, miR-124 had stronger effect to inhibit cellular functions in MCF7 cells than that in MDA-MB-231 cells. In addition, we identified that ERα, but not ERβ, was required for E2-induced miR-124 downregulation. Furthermore, AKT2, a known oncogene, was a novel direct target of miR-124. AKT2 expression levels were inversely correlated with miR-124 expression levels in human breast cancer specimens. AKT2 was overexpressed in BC specimens, and its expression levels were much higher in ERα positive cancer tissues than those ERα negative cancer tissues. Consistent with miR-124 suppression, E2 treatment increased AKT2 expression levels in MCF7 cells via ERα. Finally, overexpression of miR-124 in MCF7 cells significantly suppressed tumor growth and angiogenesis by targeting AKT2. Our results provide a mechanistic insight into a functional role of new ERα/miR-124/AKT2 signaling pathway in BC development. miR-124 and AKT2 may be used as biomarkers for ERα positive BC and therapeutic effect in the future.