The C/EBP alpha transcription factor is required for differentiation of adi
pocytes and neutrophil granulocytes, and controls cellular proliferation in
vivo. To address the molecular mechanisms of C/EBP alpha action, we have i
dentified C/EBP alpha mutants defective in repression of E2F-dependent tran
scription and found them to be impaired in their ability to suppress cellul
ar proliferation, and to induce adipocyte differentiation in vitro. Using t
argeted mutagenesis of the mouse germline, we show that E2F repression-defi
cient C/EBP alpha alleles failed to support adipocyte and granulocyte diffe
rentiation in vivo. These results indicate that E2F repression by C/EBP alp
ha is critical for its ability to induce terminal differentiation, and thus
provide genetic evidence that direct cell cycle control by a mammalian lin
eageinstructive transcription factor couples cellular growth arrest and dif
ferentiation.