It is presently unknown whether any member of the IGFBP (insulin-like growth factor binding protein) family directly participates in the control of cell proliferation. We have previously documented that induction of IGFBP-2 was associated with inhibition of DNA synthesis in lung alveolar epithelial cells. In the present study, we investigated the relationship between IGFBP-2 and the cell cycle inhibitor p21CIP1/WAF1 further. We used serum deprivation to inhibit the proliferation of MLE (mouse lung epithelial)-12 cells, and characterized the spatial localization of IGFBP-2. We found that growth inhibition, which was supported by the strong induction of p21CIP1/WAF1, was correlated with increased secretion of IGFBP-2 and, unexpectedly, with its increased localization in the nucleus and particularly in the cytoplasm. By coimmunoprecipitation, we discovered that IGFBP-2 is capable of binding to p21CIP1/WAF1. Interaction between these two proteins was further supported by colocalization of the proteins within growth-arrested cells, as visualized by confocal microscopy. Furthermore, this interaction increased with the duration of the stress, but was suppressed when proliferation was restimulated by the addition of serum. The recombinant expression of GFP (green fluorescent protein)-tagged IGFBP-2 in transfected MLE-12 cells demonstrated its ability to bind specifically to p21CIP1/WAF1. Taken together, these results provide a link between IGFBP-2 and p21CIP1/WAF1 in the regulation of alveolar lung cell proliferation.