Overexpression and activation of HER-2/neu, a proto-oncogene, play a pivotal role in cancer formation. Strong expression of HER-2/neu in cancers has been associated with poor prognosis. Reduced expression of p27(Kip1), a cyclin-dependent kinase inhibitor, correlates with poor clinical outcome in many types of carcinomas. Because many cancers with the overexpression of HER-2/neu overlap with those affected by reduced p27 expression, we studied the link between HER-2/neu oncogenic signals and p27 regulation. We found that down-regulation of p27 correlates with HER-2/neu overexpression. To address the molecular mechanism of this inverse correlation, we found that reduction of p27 is caused by enhanced ubiquitin-mediated degradation, and the HER-2/Grb2/MAPK pathway is involved in the decrease of p27 stability. Also, HER-2/neu activity causes mislocation of p27 and Jun activation domain-binding protein 1 (JAB1), an exporter of p27, into the cytoplasm, thereby facilitating p27 degradation. These results reveal that HER-2/neu signals reduce p27 stability and thus present potential points for therapeutic intervention in HER-2/neu-associated cancers.