Two pathways are initiated upon 3T3-L1 preadipocyte differentiation: the reentry of cells into the cell cycle and the initiation of a cascade of transcriptional events that "prime" the cell for differentiation. The "priming" event involves the synthesis of members of the CCAAT/enhancer binding protein (C/EBP) family of transcription factors. However, the relationship between these two pathways is unknown. Here we report that in the 3T3-L1 preadipocytes induced to differentiate, cell cycle progression and the initiation of differentiation are linked by a cell cycle-dependent Rb-C/EBPbeta interaction. Cell cycle arrest in G1 by l-mimosine inhibited differentiation-induced C/EBPbeta-DNA-binding activity and Rb phosphorylation. However, cell cycle arrest after the G1/S transition by aphidicolin or nocodazole did not prevent C/EBPbeta-DNA-binding activity or Rb phosphorylation. Furthermore, hypophosphorylated Rb and C/EBPbeta coimmunoprecipitated, whereas phosphorylated Rb and C/EBPbeta did not. Electrophoretic mobility shift assays demonstrated that recombinant hypophosphorylated Rb decreased C/EBPbeta-DNA-binding activity and that Rb overexpression inhibited C/EBPbeta-induced transcriptional activation of a C/EBPalpha-promoter-luciferase reporter gene. We conclude that C/EBPbeta-DNA-binding activity is regulated by its interaction with hypophosphorylated Rb, thereby linking the progression of the cell cycle to the initiation of differentiation during 3T3-L1 adipogenesis.