Ginsenoside Rh2 (G-Rh2) isolated from the root of Panax ginseng has been shown to have anti-cancer proliferation, differentiation and chemopreventive effects in certain cancer cell types. We investigated the mechanism of G-Rh2-induced growth inhibition in MCF-7 human breast carcinoma cells. G-Rh2 significantly inhibited the cell growth in a concentration-dependent manner, which effect was reversible, and induced a G1 arrest in cell cycle progression. G-Rh2 treatment down-regulated the protein level of cyclin D3 but upregulated the expression of cyclin-dependent kinase (Cdk) inhibitor p21WAF1/CIP1. The increased levels of p21 were associated with increased binding of p21 and Cdk2 concomitant with marked decrease in Cdk2 and cyclin E-dependent kinase activities with no changes in Cdk2 and cyclin E expression. G-Rh2 markedly reduced the phosphorylated retinoblastoma protein (pRb) and enchanced association of unphosphorylated pRb and the transcription factor E2F-1. These data suggest that G-Rh2 inhibited the growth of MCF-7 cells, by inducing protein expression of p21 and reducing the protein levels of cyclin D which resulted in the down-regulation of cyclin/Cdk complex kinase activity, decreasing phosphorylation of pRb, and inhibiting E2F release.