The cyclin-dependent kinase inhibitor p21(WAF1,CIP1,SDI1) plays a critical role in cell differentiation, and it has been shown to confer resistance to apoptosis. Based on this, and on evidence that activation of the gp130/signal transducer and activator of transcription (STAT) signal transduction pathway by interleukin (IL)-6 type cytokines promotes differentiation and prevents apoptosis in osteoblastic cells, we have investigated the possibility that p21 is a downstream effector of this signaling pathway in osteoblasts. We report that either oncostatin M (OSM) or IL-6 plus soluble IL-6 receptor increased the levels of p21 mRNA and protein in the osteoblast-like human osteosarcoma cell line MG63 and stimulated the activity of a 2.4-kilobase pair segment of the human p21 gene promoter. Further, nuclear extracts from cytokine-stimulated MG63 cells formed protein-DNA complexes with a 19-base pair nucleotide fragment of the p21 promoter containing a single STAT response element. The identity of the binding proteins as Stat3 and Stat1 was demonstrated with specific antibodies. In addition, and in support of a mediating role of STATs in the activation of the p21 promoter, overexpression of Stat3 potentiated the cytokine effect on the p21 promoter; whereas a dominant negative Stat3, or a mutation of the STAT response element on the promoter, significantly reduced the cytokine effect. Finally, antisense oligonucleotides complementary to p21 mRNA inhibited OSM-induced stimulation of alkaline phosphatase expression and antagonized the protective effect of OSM on anti-Fas-induced apoptosis. These results demonstrate that p21 is a downstream effector of gp130/Stat3 activation and a critical mediator of the pro-differentiating and anti-apoptotic effects of IL-6 type cytokines on human osteoblastic cells.