A transcriptional regulator, Hes1, plays crucial roles in the control of differentiation and proliferation of neuronal, endocrine, and T-lymphocyte progenitors during development. Mechanisms for the regulation of cell proliferation by Hes1, however, remain to be verified. In embryonic carcinoma cells, endogenous Hes1 expression was repressed by retinoic acid in concord with enhanced p27(Kip1) expression and cell cycle arrest. Conversely, conditional expression of a moderate but not maximal level of Hes1 in HeLa cells by a tetracycline-inducible system resulted in reduced p27(Kip1) expression, which was attributed to decreased basal transcript rather than enhanced proteasomal degradation, with concomitant increases in the growth rate and saturation density. Hes1 induction repressed the promoter activity of a 5' flanking basal enhancer region of p27(Kip1) gene in a manner dependent on Hes1 expression levels, and this was mediated by its binding to class C sites in the promoter region. Finally, hypoplastic fetal thymi, as well as livers and brains of Hes1-deficient mice, showed significantly increased p27(Kip1) transcripts compared with those of control littermates. These results have suggested that Hes1 directly contributes to the promotion of progenitor cell proliferation through transcriptional repression of a cyclin-dependent kinase inhibitor, p27(Kip1).