Recent studies have shown that decreased expression of p27Kip1 is associated with high grade tumors and an unfavorable prognosis in several types of human cancer. To clarify the role of p27Kip1 in colon cancer, we have overexpressed this protein in the HT29 colon cancer cell line. The derivatives displayed an increase in the p27Kip1 protein in cyclin E/CDK2 immunoprecipitates and a decrease in cyclin E-associated kinase activity when compared to vector control clones, providing evidence that the overexpressed protein was functional. Clones with a high level of p27Kip1 displayed partial growth inhibition in monolayer culture and a decrease in plating efficiency, even though they expressed increased levels of the cyclin D1 protein. Using alkaline phosphatase expression as a marker, we found that the p27Kip1 overexpressor clones displayed a 2-3-fold increase in sensitivity to induction of differentiation by 2 mM sodium butyrate. In contrast to these results, derivatives of HT29 cells that stably overexpressed p21Cip1/Waf1 displayed decreased sensitivity to the induction of differentiation. These findings may explain why decreased levels of p27Kip1 in certain human cancers is associated with high grade (poorly differentiated) tumors, and suggest that strategies that increase the level of p27Kip1 may be useful in cancer therapy.