p21Sdi1/WAF1/Cip1 inhibits cyclin-dependent protein kinases and cell proliferation. p21 is presumed to inhibit growth by preventing the phosphorylation of growth-regulatory proteins, including the retinoblastoma tumor suppressor protein (pRb). The ultimate effector(s) of p21 growth inhibition, however, is largely a matter of conjecture. We show that p21 inhibits the activity of E2F, an essential growth-stimulatory transcription factor that is negatively regulated by unphosphorylated pRb. p21 suppressed the activity of E2F-responsive promoters (dihydrofolate reductase and cdc2), but E2F-unresponsive promoters (c-fos and simian virus 40 early) were unaffected. Moreover, the simian virus 40 early promoter was rendered p21 suppressible by introducing wild-type, but not mutant, E2F binding sites; p21 deletion mutants showed good agreement in their abilities to inhibit E2F transactivation and DNA synthesis; and E2F-1 (which binds pRb), but not E2F-4 (which does not), reversed both inhibitory effects of p21. Despite the central role for pRb in regulating E2F, p21 suppressed growth and E2F activity in cells lacking a functional pRb. Moreover, p21 protein (wild type but not mutant) specifically disrupted an E2F-cyclin-dependent protein kinase 2-p107 DNA binding complex in nuclear extracts of proliferating cells, whether or not they expressed normal pRb. Thus, E2F is a critical target and ultimate effector of p21 action, and pRb is not essential for the inhibition of growth or E2F-dependent transcription.