The molecular mechanism underlying protein kinase C (PKC)-mediated cell cycle arrest is poorly understood. We undertook to characterize phorbol ester-activated PKC-mediated cell cycle arrest. Treatment with phorbol ester inhibited cell growth of human histiocytic lymphoma U937 cells with 83% of the cells arrested in G1 phase. Reduced activity of cdk2 correlated with cdk2 dephosphorylation and accumulation of cdk2 inhibitor p21Waf in phorbol ester-treated cells. Dephosphorylation of cdk2 was not associated with cdk7 and cdc25A activity in phorbol ester-treated cells. Protein phosphatase inhibitor assays suggest that the dephosphorylation of cdk2 results in the activation of a specific protein tyrosine phosphatase. Thus, dephosphorylation of cdk2 as well as accumulation of cdk2 inhibitor is likely to contribute to the G1 phase arrest in phorbol ester-treated in U937 cells.