We examined the expression and the regulation of p21(waf1) and p27(kip1) cdk inhibitors in P19 mouse embryonal carcinoma (EC) cells following treatment with all-trans retinoic acid (ATRA) to induce neuronal differentiation. The levels of p27 mRNA and protein increased within 24 h of treatment with ATRA, reaching a plateau 4-5 days later prior to neurite formation. In contrast, levels of p21 expression remained low until after neurites were extensively formed. Induction of muscle differentiation from P19 cells by treatment with dimethyl sulfoxide caused only transient increases in p27 levels. In a mutant P19 cell line, RAC65, treatment with ATRA induced neither p27 accumulation nor neuronal differentiation, but p21 mRNA expression increased markedly. In contrast, treatment of RAC65 cells with 9-cis retinoic acid induced both p27 expression and neuronal differentiation. Correlation between p27 expression and neuronal differentiation was also observed in NT2/D1 human EC cells. Luciferase reporter assays showed that p27 promoter activity increased in ATRA-treated cells, consistent with the elevation of p27 mRNA levels. Arrest of neuronal differentiation of P19 cells by okadaic acid resulted in inhibition of p27 expression, whereas p21 mRNA expression was greatly enhanced. Conversely, inhibition of p27 expression by antisense p27 oligonucleotides resulted in blockade of neuronal differentiation. Taken together, these results strongly suggest that the expression of p27 is indispensable for neuronal differentiation of EC cells.