The cellular mechanisms regulating intestinal differentiation are poorly understood. Sodium butyrate (NaBT), a short-chain fatty acid, increases p27 Kip1 expression and induces cell cycle arrest associated with intestinal cell differentiation. Here, we show that treatment of intestinal-derived cells with NaBT induced G0/G1 arrest and intestinal alkaline phosphatase, a marker of differentiation, activity and mRNA expression; this induction was attenuated by inhibition of glycogen synthase kinase-3 (GSK-3). Moreover, treatment with NaBT increased the nuclear, but not the cytosolic, expression and activity of GSK-3beta. NaBT decreased cyclin-dependent kinase CDK2 activity and induced p27 Kip1 expression; inhibition of GSK-3 rescued NaBT-inhibited CDK2 activity and blocked NaBT-induced p27 Kip1 expression in the nucleus but not in the cytoplasm. In addition, we demonstrate that NaBT decreased the expression of S-phase kinase-associated protein 2 (Skp2), and this decrease was attenuated by GSK-3 inhibition. Furthermore, NaBT increased p27 Kip1 binding to CDK2, which was completely abolished by GSK-3 inhibition. Overexpression of an active form of GSK-3beta reduced Skp2 expression, increased p27 Kip1 in the nucleus and increased p27 Kip1 binding to CDK2. Our results suggest that GSK-3 not only regulates nuclear p27 Kip1 expression through the downregulation of nuclear Skp2 expression but also functions to regulate p27 Kip1 assembly with CDK2, thereby playing a critical role in the G0/G1 arrest associated with intestinal cell differentiation.