Differentiation of cells is typically marked by a cessation of proliferation with a concurrent entrance into a distinct metabolic state marked by tissue specific gene expression. The mechanism by which the cell exits the cell cycle in this process is poorly understood. To determine the potential roles of the cell cycle machinery in the regulation of the terminal differentiation process of epidermal cells, we selected a well characterized in vitro model in which primary mouse keratinocytes are induced to differentiate in response to a raised calcium ion concentration in the medium. The withdrawal from the cell cycle correlates very well with a number of changes in the cell cycle machinery. Changes in the phosphorylation status of the Rb family of proteins occurs coordinately with an increased association of p21, p27 and p57 with cdk2. Furthermore, we find that inhibition of cdk2 activity is not sufficient to elicit changes that occur during keratinocyte differentiation. Finally, the previously described v-Ha-ras block of keratinocyte differentiation correlates with altered regulation of both cyclin D1 and cdk2 suggesting that these genes may play a role in the Ha-ras transformation of a keratinocyte.