The c-jun proto-oncogene encodes a component of the mitogen-inducible immediate-early transcription factor AP-1 and has been implicated as a positive regulator of cell proliferation and G1-to-S-phase progression. Here we report that fibroblasts derived from c-jun-/- mouse fetuses exhibit a severe proliferation defect and undergo a prolonged crisis before spontaneous immortalization. The cyclin D1- and cyclin E-dependent kinases (CDKs) and transcription factor E2F are poorly activated, resulting in inefficient G1-to-S-phase progression. Furthermore, the absence of c-Jun results in elevated expression of the tumor suppressor gene p53 and its target gene, the CDK inhibitor p21, whereas overexpression of c-Jun represses p53 and p21 expression and accelerates cell proliferation. Surprisingly, protein stabilization, the common mechanism of p53 regulation, is not involved in up-regulation of p53 in c-jun-/- fibroblasts. Rather, c-Jun regulates transcription of p53 negatively by direct binding to a variant AP-1 site in the p53 promoter. Importantly, deletion of p53 abrogates all defects of cells lacking c-Jun in cell cycle progression, proliferation, immortalization, and activation of G1 CDKs and E2F. These results demonstrate that an essential, rate-limiting function of c-Jun in fibroblast proliferation is negative regulation of p53 expression, and establish a mechanistic link between c-Jun-dependent mitogenic signaling and cell-cycle regulation.