The transcription factor CCAAT/enhancer binding protein α (C/EBPα) is a strong inhibitor of cell proliferation. We found that C/EBPα directly interacts with cdk2 and cdk4 and arrests cell proliferation by inhibiting these kinases. We mapped a short growth inhibitory region of C/EBPα between amino acids 175 and 187. This portion of C/EBPα is responsible for direct inhibition of cyclin-dependent kinases and causes growth arrest in cultured cells. C/EBPα inhibits cdk2 activity by blocking the association of cdk2 with cyclins. Importantly, the activities of cdk4 and cdk2 are increased in C/EBPα knockout livers, leading to increased proliferation. Our data demonstrate that the liver-specific transcription factor C/EBPα brings about growth arrest through direct inhibition of cdk2 and cdk4.