Both cyclin D1 and the transcription factor C/EBPβ are required for mammary epithelial cell differentiation; however, the pathway in which they operate is uncertain. Previous analyses of the patterns of gene expression in human tumors suggested a connection between cyclin D1 overexpression and C/EBPβ, but whether this represents a cancer-specific gain of function for cyclin D1 is unknown. C/EBPβ is an intronless gene encoding three protein isoforms--LAP1, LAP2, and LIP. Here, we provide evidence that cyclin D1 engages C/EBPβ in an isoform-specific manner. Cyclin D1 binds to LAP1, an event that activates the transcriptional function of LAP1 by relieving its autoinhibited state effected by intramolecular interactions. Reexpression of LAP1 but not LAP2 or LIP restores the ability of C/EBPβ-deficient mammary epithelial cells to differentiate and does so in a manner dependent on cyclin D1. And cyclin D1-mediated activation of LAP1 participates in mammary epithelial cell differentiation. Our findings indicate that cyclin D1 and C/EBPβ LAP1 operate in a common pathway to promote mammary epithelial cell differentiation.