Activation of Myc triggers a rapid induction of cyclin E/cdk2 kinase activity and degradation of p27. Overt degradation of p27 is preceded by a specific dissociation of p27 from cyclin E/cdk2, but not from cyclin D/cdk4 complexes. We now show that cyclin E/cdk2 phosphorylates p27 at a carboxy-terminal threonine residue (T187) in vitro; mutation of this residue to valine stabilises cyclin E/cdk2 complexes. This reaction is not significantly inhibited by high concentrations of p27, suggesting that cdk2 bound to p27 is catalytically active. In vivo, p27 bound to cyclins E and A, but not to D-type cyclins is phosphorylated. Myc-induced release of p27 from cdk2 requires cdk2 kinase activity and is delayed in a T187V mutant of p27. After induction of Myc, p27 phosphorylated at threonine 187 transiently accumulates in a non cdk2 bound form. Our data suggest a mechanism in which p27 is released from cyclin E/cdk2 upon phosphorylation; in Myc-transformed cells, release is efficient as phosphorylated p27 is transiently bound in a non-cdk2 containing complex and subsequently degraded.