Lapatinib, a dual EGFR/HER2 tyrosine kinase inhibitor, has been shown to have potent antitumor effects against human breast cancer. Recent studies have shown that lapatinib upregulates p27 (Kip1) (here after referred to as p27) expression and induces G 1 cell cycle arrest in various types of cancer cells. However, the regulation of p27 in lapatinib-induced cell cycle arrest is not well studied. Here we demonstrate that lapatinib-induced cell growth inhibition and G 1 cell cycle arrest in HER2-overexpressing human breast cancer cells were dependent on p27. We also show that lapatinib-induced upregulation of p27 expression was mediated through both transcriptional and post-translational mechanisms. On the one hand, lapatinib treatment led to increased FOXO3a expression and enhanced p27 transcription. On the other hand, lapatinib treatment resulted in increased DYRK1B expression, which correlated with increased p27 phosphorylation at Ser10 and decreased p27 degradation. Interestingly, we found that ERβ1 but not ERβ2 expression also upregulated p27 and enhanced lapatinib-induced cell proliferation inhibition and G 1 cell cycle arrest in HER2-overexpressing breast cancer cells. Taken together, our results suggest that lapatinib induces p27 expression via both transcriptional and post-translational upregulations, leading to cell cycle arrest and cell proliferation inhibition, and that its effect on breast cancer cells may be modified by ER expression status.