Cyclin dependent kinases regulate the progression of eukaryotic cells through the cell cycle. p21Cip1/Waf1/Sdi1 is an inhibitor of cdk-cyclin kinase activity, and has been shown to form complexes with cdk-cyclins and with PCNA, an accessory protein of DNA polymerase delta. The kinase inhibitory domain maps to the N-terminus (1-82) and contains the cdk2 binding site (28-82). We have generated a panel of deletion mutants of p21. A functional characterization of p21 mutants in the N-terminal domain reveals that cyclins bind to this domain independently of cdk2. Correlating with these results we find that p21 can associate with cyclin-cdk kinases in two functionally distinct forms, one in which the kinase activity is inhibited and the other in which the kinase is still active. The cdk2 and cyclin binding sites on p21 are both required to inhibit kinase activity. The second type of interaction, in which an active cyclin-cdk complex only interacts with p21 either via the cyclin or the cdk2 binding site but not through both, does not lead to inhibition of cyclin kinase activity. These results thus provide a basis for understanding the mechanism by which p21, and perhaps other cdk-cyclin kinase inhibitory proteins, suppress kinase activity.