Type I interferons (IFN), such as IFN-alpha, are potent antiproliferative and antitumor agents. IFN-tau, originally identified as a pregnancy recognition hormone, is a type I IFN that is related to IFN-alpha. We examine here the mechanism of the antiproliferative effects of IFN-alpha and IFN-tau in terms of their effects on intracellular events that regulate the cell cycle. Both IFN inhibited proliferation of the human Burkitt lymphoma cell line, Daudi, causing accumulation of cells in the G1 phase of the cell cycle. IFN-alpha was more effective than IFN-tau in this regard. Both IFN were found to inhibit the kinase activity of the cyclin-dependent kinase cdk2 in a manner that correlated with their relative abilities to cause cells to accumulate in the G1 phase of the cell cycle. Further, IFN treatment did not affect the expression of cdk2 protein, suggesting that the IFN modulated cdk2 activity through a cdk inhibitor. Consistent with this conclusion, both IFN induced the expression of the cyclin-dependent kinase inhibitor protein p21. The levels of p21 induced also correlated with the relative abilities of the IFN to inhibit cdk2 activity and to arrest cell growth in the G1 phase of the cell cycle. Moreover, following IFN treatment, increased levels of p21 were found complexed with cdk2, consistent with its role in the inhibition of cdk2 activity. These data suggest that p21-mediated inhibition of cdk2 activity plays an important role in the antiproliferative activity of type I IFN. The findings highlight interesting similarities between these cytokines and the products of tumor suppressor genes, such as p53, and may indicate a mechanism for the antitumor effects of the type I IFN.