By genetic correlation with the growth-suppressible phenotype and direct functional tests, we demonstrate that the glucocorticoid-stimulated expression of the CCAAT/enhancer-binding protein alpha (C/EBP alpha) transcription factor is required for the steroid-mediated G1 cell cycle arrest of minimal-deviation rat hepatoma cells. Comparison of C/EBP alpha transcript and active protein levels induced by the synthetic glucocorticoid dexamethasone in glucocorticoid growth-suppressible (BDS1), nonsuppressible receptor-positive (EDR1) and nonsuppressible receptor-deficient (EDR3) hepatoma cell proliferative variants revealed that the stimulation of C/EBP alpha expression is a rapid, glucocorticoid receptor-mediated response associated with the G1 cell cycle arrest. Consistent with the role of C/EBP alpha as a critical intermediate in the growth suppression response, maximal induction of transcription factor mRNA occurred within 2 h of dexamethasone treatment whereas maximal inhibition of [3H] thymidine incorporation was observed 24 h after steroid treatment. As a direct functional approach, ablation of C/EBP alpha protein expression and DNA-binding activity by transfection of an antisense C/EBP alpha expression vector blocked the dexamethasone-induced G1 cell cycle arrest of hepatoma cells but did not alter general glucocorticoid responsiveness. Transforming growth factor beta induced a G1 cell cycle arrest in C/EBP alpha antisense transfected cells, demonstrating the specific involvement of C/EBP alpha in the glucocorticoid growth suppression response. Constitutive expression of a conditionally activated form of C/EBP alpha caused a G1 cell cycle arrest of BDS1 hepatoma cells in the absence of glucocorticoids. In contrast, overexpression of C/EBP beta or C/EBP delta had no effect on hepatoma cell growth. Taken together, these results demonstrate that the steroid-induced expression of C/EBP alpha is necessary to mediate the glucocorticoid G1 cell cycle arrest of rat hepatoma cells and implicates a role for this transcription factor in the growth control of liver-derived epithelial tumor cells.