Entry of cells into the cell division cycle requires the coordinated activation of cyclin‐dependent kinases (cdks) and the deactivation of cyclin kinase inhibitors. Degradation of p27kip1 is known to be a central component of this process as it allows controlled activation of cdk2‐associated kinase activity. Turnover of p27 at the G1/S transition is regulated through phosphorylation at T187 and subsequent SCF^skp2‐dependent ubiquitylation. However, detailed analysis of this process revealed the existence of additional pathways that regulate the abundance of the protein in early G1 and as cells exit quiescence. Here, we report on a molecular mechanism that regulates p27 stability by phosphorylation at T198. Phosphorylation of p27 at T198 prevents ubiquitin‐dependent degradation of free p27. T198 phosphorylation also controls progression through the G1 phase of the cell cycle by regulating the association of p27 with cyclin–cdk complexes. Our results unveil the molecular composition of a pathway, which regulates the abundance and activity of p27kip1 during early G1. They also explain how the T187‐ and the T198‐dependent turnover systems synergize to allow cell cycle progression in G1.