The hormonal form of vitamin D, 1,25-dihydroxyvitamin D3, acting through its cognate nuclear receptor (vitamin D3 receptor, VDR) will induce myeloid leukemic cell lines to terminally differentiate into monocytes/macrophages. Because VDR acts by transcriptionally regulating responsive genes in a ligand-dependent manner, we sought target genes of the receptor that initiate, the differentiation process in response to ligand. We screened a cDNA library prepared from the myelomonocytic U937 cell line with probes generated from either 1,25-dihydroxyvitamin D3-treated or untreated cells. We report here that a candidate clone that hybridized differentially is the Cdk inhibitor p21WAF1, CIP1. Furthermore, we show that p21 is transcriptionally induced by 1,25-dihydroxyvitamin D3 in a VDR-dependent, but not p53-dependent, manner, and we identify a functional vitamin D response element in the p21 promoter. Transient overexpression of p21 and/or the related Cdk inhibitor p27 in U937 cells in the absence of 1,25-dihydroxyvitamin D3 results in the cell-surface expression of monocyte/macrophage-specific markers, suggesting that ligand-modulated transcriptional induction of the p21 gene facilitates the induced differentiation of this monoblastic cell line. We believe that this is the first report demonstrating that the ectopic overexpression of a Cdk inhibitor such as p21 or p27 directly leads to a terminal differentiation program.