Two pathways are initiated upon 3T3-L1 preadipocyte differentiation: the reentry of cells into the cell cycle and the initiation of a cascade of transcriptional events that 'prime' the cell for differentiation. The 'priming' event involves the synthesis of members of the CCAAT/enhancer binding protein (C/EBP) family of transcription factors. What is not known is the relationship between these two pathways. Here we report that in 3T3-L1 preadipocytes induced to differentiate, cell cycle progression and the initiation of differentiation are linked by a cell cycle-dependent Rb-C/EBP interaction. Cell cycle arrest in G1 by L-mimosine inhibited differentiation-induced C/EBP-DNA-binding activity and Rb phosphorylation. However, cell cycle arrest after the G1/S transition by aphidicolin (S) or nocodazole (G2/M) did not prevent C/EBP-DNA-binding activity or Rb phosphorylation. Furthermore, hypophosphorylated Rb and C/EBP coimmunoprecipitated, while phosphorylated Rb and C/EBP did not. Electrophoretic mobility shift assays demonstrated that recombinant hypophosphorylated Rb decreased C/EBP-DNA-binding activity and that Rb over-expression inhibited C/EBP-induced transcriptional activation of a C/EBP promoter-luciferase reporter gene. We conclude that C/EBP-DNA-binding activity is regulated by its interaction with hypophosphorylated Rb, thereby linking the progression of the cell cycle to the initiation of differentiation during 3T3-L1 adipogenesis.