Lineage-determination transcription factors coordinate cell differentiation and proliferation by controlling the synthesis of lineage-specific gene products as well as cell cycle regulators. GATA-1 is a master regulator of erythropoiesis. Its role in regulating erythroid-specific genes has been extensively studied, whereas its role in controlling genes that regulate cell proliferation is less understood. Ectopic expression of GATA-1 in erythroleukemia cells releases the block to their differentiation and leads to terminal cell division. An early event in reprogramming the erythroleukemia cells is induction of the cyclin-dependent kinase inhibitor p21. Remarkably, ectopic expression of p21 also induces the erythroleukemia cells to differentiate. We now report that GATA-1 directly regulates transcription of the p21 gene in both erythroleukemia cells and normal erythroid progenitors. Using reporter, electrophoretic mobility shift, and chromatin immunoprecipitation assays, we show that GATA-1 stimulates p21 gene transcription by binding to consensus binding sites in the upstream region of the p21 gene promoter. This activity is also dependent on a binding site for Sp1/KLF-like factors near the transcription start site. Our findings indicate that p21 is a crucial downstream gene target and effector of GATA-1 during red blood cell terminal differentiation.