The G1-phase cell-cycle inhibitor p21 has been proposed to mediate growth arrest during differentiation. Upregulation of p21 has been shown in multiple cell lines induced to differentiate; however, the mechanism of p21 induction during normal differentiation is largely unknown. In this report, we use normal hematopoietic precursor cells obtained from umbilical cord to model p21 regulation during differentiation. Myeloid maturation of CD34⁺ precursor cells is associated with a marked increase in p21 expression at the RNA and protein level. The upregulation of p21 transcripts during differentiation is associated with decreased binding to a highly conserved 44-bp fragment within the p21 promoter. This 44-bp regulatory element binds a novel modulator of p21 expression. It is of considerable interest that, although the binding activity is expressed in p53-negative as well as in p53-positive cells, the DNA sequence recognized by this protein overlaps a PuPuPuC(A/T)(T/A)GPyPyPy consensus sequence for p53.