The CCAAT/enhancer binding protein-alpha (C/EBPalpha) is a transcription factor required for differentiation of myeloid progenitors. In addition to specific DNA binding, C/EBPalpha is also involved in protein-protein interactions, some of which (p21, Cdk2/Cdk4, E2F) appear to be required for inhibition of proliferation and possibly differentiation. To investigate the mechanisms of C/EBPalpha-induced granulocytic differentiation, we generated C/EBPalpha mutants reportedly defective in DNA binding, transactivation, and Cdk2/Cdk4 and E2F interaction and assessed their effects in a myeloid precursor cell line, primary bone marrow and C/EBPalpha knockout fetal liver precursor cells. We show here that the DNA binding-deficient Lys298Glu mutant, the E2F binding-deficient basic region mutant 2 (BRM-2) carrying the Ile294Ala and Arg297Ala substitutions, and the transactivation-deficient N-terminus truncated p30 mutant all fail to promote differentiation on ectopic expression in myeloid precursor cells. By contrast, ectopic expression of the Cdk2/Cdk4 interaction-deficient Delta177-191 mutant promotes differentiation and induces gene expression as effectively as wild-type C/EBPalpha. Thus, the integrity of the transactivation and DNA binding domains, but not of the Cdk2/Cdk4 interaction region, is necessary for C/EBPalpha-induced differentiation. Since the E2F binding-deficient BRM-2 mutant interacted with E2F-1 but failed to activate gene expression, our results lend support to the hypothesis that activation of gene transcription is the determining factor in C/EBPalpha-dependent differentiation.