Addition of nerve growth factor (NGF) to PC12 cells promotes neuronal differentiation while inhibiting cell proliferation. In order to understand how NGF exerts its antimitogenic effect during differentiation, we have studied the mechanism by which this factor activates the promoter of the CDK inhibitor p21W4F1/CIP1. The minimal region of the p21 promoter required for the NGF-induction was mapped to a contiguous stretch of 10 bp located 83 bases upstream of the transcription initiation site. This GC-rich region was shown to interact specifically with the transcription factor Sp1 and the related protein Sp3, in either exponentially-growing or NGF-treated PC12 cells. The addition of NGF resulted in an accumulation of the transcriptional co-activator p300 in complexes associated with the NGF-responsive region. Transcriptional activity of Sp1, Sp3 and p300 was specifically induced by NGF in a Gal4-fusion assay, indicating that induction of p21 during neuronal differentiation may involve regulation of the activity of these factors by NGF. Furthermore, p300 was able to act as a co-activator for Sp1-mediated transcriptional activation in PC12 cells, suggesting that p300 and Sp1 may cooperate in activating p21 transcription during the withdrawal of neuronal precursors from the cell cycle. This hypothesis is supported by experiments showing that p300 and Sp1 form complexes in PC12 cells.