C/EBPalpha has a role in growth arrest and differentiation of mouse preadipocytes. To study the mechanism of C/EBPalpha-induced growth arrest, we developed a cell line, HT1, that contained the human C/EBPalpha gene under Lac repressor control. IPTG-induced C/EBPalpha caused inhibition of cell proliferation and DNA synthesis as measured by colony growth assays, cell counting, and BrdU uptake. A number of proteins that are known to be involved in the regulation of the cell cycle, such as cyclin-dependent kinase (CDK)2 and CDK4, proliferating cell nuclear antigen (PCNA), p53, c-fos, and the CDK inhibitor p16 and p27 were investigated by Western analysis. No change in their expression was observed. However, the p21 (WAF-1/CIP-1/SDI-1) protein was significantly elevated in growth-arrested HT1 cells. Elevation of p21/SDI-1 mRNA (threefold) and activation of the p21/SDI-1 promoter by C/EBPalpha did not account for the 12- to 20-fold increase in p21/SDI-1 protein. Protein synthesis inhibition by cycloheximide (CHX) treatment indicated that the half-life of p21/SDI-1 in dividing HT1 cells was approximately 30 min. However, in C/EBPalpha growth-arrested cells, the level of the p21/SDI-1 did not change for > 80 min after CHX addition. Our studies demonstrate that C/EBPalpha activates p21/SDI-1 by increasing p21/SDI-1 gene expression and by post-translational stabilization of p21/SDI-1 protein. Furthermore, induction of p21/SDI-1 is responsible for the ability of C/EBPalpha to inhibit proliferation because transcription of antisense p21/SDI-1 mRNA eliminated growth inhibition by C/EBPalpha.