Recent studies suggest that cyclin D1 mediates progression of hepatocytes through G(1) phase of the cell cycle. The present study further examines the regulation of cyclin D1-dependent kinase activity and the interplay between cyclin D1 and other G(1) phase regulatory proteins during liver regeneration. After 70% partial hepatectomy in rats, there was upregulation of kinase activity associated with cyclins (A, D1, D3, and E), cyclin-dependent kinases (Cdk2 and Cdk4), and Cdk-inhibitory proteins (p27, p107, and p130). Although cyclin D1/Cdk4 complexes were more abundant in the cytoplasmic fraction after partial hepatectomy, kinase activity was detected primarily in the nuclear fraction. Cytoplasmic cyclin D1/Cdk4 complexes were activated by recombinant cyclin H/Cdk7. Because endogenous Cdk7 activity was found in the nucleus, this suggests that activation of cyclin D1/Cdk4 requires nuclear importation and subsequent phosphorylation by cyclin H/Cdk7. Recombinant cyclin E/Cdk2 was inhibited by extracts from quiescent liver, and cyclin D1 could titrate out this inhibitory activity. Induction of cyclin D1 was accompanied by increased abundance of cyclin D1/p27 complexes, and most p27 was sequestered by cyclin D1 after partial hepatectomy. Thus cyclin D1 appears to play two roles during G(1) phase progression in the regenerating liver: it forms a nuclear kinase complex, and it promotes activation of Cdk2 by sequestering inhibitory proteins such as p27. These experiments underscore the complexity of cyclin/Cdk regulatory networks in the regenerating liver.