The PC12 pheochromocytoma cell line responds to nerve growth factor (NGF) by gradually exiting from the cell cycle and differentiating to a sympathetic neuronal phenotype. We have shown previously () that NGF induces the expression of the p21 WAF1/CIP1/Sdi1 (p21) cyclin-dependent kinase (Cdk) inhibitor protein and the G1 phase cyclin, cyclin D1. In this report, we show that induction is at the level of transcription and that the DNA elements in both promoters that are required for NGF-specific induction are clusters of binding sites for the Sp1 transcription factor. NGF also induced a synthetic promoter with repeated Sp1 sites linked to a core promoter, and a plasmid regulated by a chimeric transactivator in which the Gal4 DNA binding domain is fused to the Sp1 transactivation domain, indicating that this transactivation domain is regulated by NGF. Epidermal growth factor, which is a weak mitogen for PC12, failed to induce any of these promoter constructs. We consider a model in which the PC12 cell cycle is arrested as p21 accumulates and attains inhibitory levels relative to Cdk/cyclin complexes. Sustained activation of p21 expression is proposed to be a distinguishing feature of the activity of NGF that contributes to PC12 growth arrest during differentiation