CCAAT/enhancer binding protein alpha (C/EBPalpha) transactivates target genes dependent upon DNA binding via its basic region-leucine zipper domain and slows G1 progression by interaction with E2F, cdk2, or cdk4. E2F interacts with the non-DNA-binding surface of the C/EBPalpha basic region and C/EBPalpha residues 1-70 are required for repressing E2F targets, while cdk2 and cdk4 bind residues 177-191. C/EBPalpha-ER induces the 32D cl3 myeloblast cell line to differentiate to granulocytes. C/EBPalpha-ER variants incapable of binding DNA slowed G1, but did not induce early or late granulopoiesis, indicating that cell cycle inhibition as mediated by C/EBPalpha is not sufficient for differentiation. C/EBPalpha-ER variants lacking residues 11-70 or residues 11-70 and 178-200 both slowed the G1 to S transition. C/EBPalpha(GZ)-ER, containing the GCN4 rather than the C/EBPalpha leucine zipper, also slowed G1. In contrast, C/EBPalpha(BRM2)-ER, carrying mutations in the outer surface of the basic region required for interaction with E2F, did not slow G1. C/EBPalpha(BRM2)-ER induced early markers of granulopoiesis much less efficiently than C/EBPalpha-ER and did not direct terminal maturation. Inhibition of G1 progression using mimosine increased induction of late markers by G-CSF. Thus, both DNA binding and cell cycle arrest, mediated by opposite surfaces of the C/EBPalpha basic region, are required for granulopoiesis.