Progesterone has biphasic effects on proliferation of breast cancer cells; it stimulates growth in the first cell cycle, then arrests cells at G1/S of the second cycle accompanied by up-regulation of the cyclin-dependent kinase inhibitor, p21. We now show that progesterone regulates transcription of the p21 promoter by an unusual mechanism. This promoter lacks a canonical progesterone response element. Instead, progesterone receptors (PRs) interact with the promoter through the transcription factor Sp1 at the third and fourth of six Sp1 binding sites located downstream of nucleotide 154. Mutation of Sp1 site 3 eliminates basal transcription, and mutation of sites 3 and 4 eliminates transcriptional up-regulation by progesterone. Progesterone-mediated transcription is further prevented by overexpression of E1A, suggesting that CBP/p300 is required. Indeed, in HeLa cells, Sp1 and CBP/p300 associate with stably integrated flag-tagged PRs in a multiprotein complex. Since many signals converge on p21, cross-talk between PRs and other factors co-localized on the p21 promoter, may explain how progesterone can be either proliferative or differentiative in different target cells.