Sterol regulatory element-binding proteins (SREBPs) are membrane-bound transcription factors that regulate lipid synthetic genes. In contrast to SREBP-2, which regulates cellular cholesterol level in normal cells, SREBP-1a is highly expressed in actively growing cells and activates entire programs of genes involved in lipid synthesis such as cholesterol, fatty acids, triglycerides, and phospholipids. Previously, the physiological relevance of this potent activity of SREBP-1a has been thought to regulate the supply of membrane lipids in response to cell growth. Here we show that nuclear SREBP-1a and SREBP-2 bind directly to a novel SREBP binding site in the promoter of the p21(WAF1/CIP1) gene, the major cyclin-dependent kinase inhibitor, and strongly activate its promoter activity. Only the SREBP-1a isoform consistently causes induction of p21 at both the mRNA and protein levels. Colony formation assays and polyploidy of livers from transgenic mice suggest that activation of p21 by SREBP-1a could inhibit cell growth. Activation of endogenous SREBPs in lipid deprivation conditions was associated with induction of p21 mRNA and protein. Expression of p21 was reduced in SREBP-1 null mice. These data suggest a physiological role of SREBP-1a in p21 regulation. Identification of p21 as a new SREBP target might implicate a new paradigm in the link between lipid synthesis and cell growth.