Cyclin-dependent kinase inhibitory proteins are negative regulators of the cell cycle. Although all the cyclin-dependent kinase inhibitory proteins may be involved in cell cycle control during a differentiation process, only p57(Kip2) is shown to be essential for embryonic development. However, the role of p57 in the control of the cell cycle is poorly understood. Using osteoblasts derived from the calvaria of rat fetus, we show that p57 is accumulated in cells starved by low serum. Cyclin-dependent kinase 2 activity was suppressed in these cells with a significant amount bound to p57. Treatment of the cells with transforming growth factor beta1 dramatically reduced the amount of p57, resulting in an activation of cyclin-dependent kinase 2 activity and the stimulation of cell proliferation. The decrease in p57 was inhibited by treating the cells with proteasome inhibitors, Z-Leu-Leu-Leu-aldehyde or lactacystin, but not with Z-Leu-Leu-aldehyde, which is an inhibitor of calpain, indicating that p57 is degraded through the proteasome pathway. p57 was also shown to be ubiquitinated in vitro. Because transforming growth factor beta1 not only stimulates the growth but also inhibits the differentiation of the cells in this system, our results may suggest a possible involvement of p57 in the control of osteoblastic cell proliferation and differentiation.