Differentiation agents use existing cellular systems to induce neoplastic cells to regain a normal phenotype and/or to cause growth arrest and therefore may offer novel chemotherapeutic approaches to treating solid tumors. In this study, we demonstrate in Caco-2 colon cancer cells that the differentiation agent phenylbutyrate (PB) causes a decrease in viable cells, an increase in cell differentiation, and a G1-S-phase block. The mechanism of this last effect is related to a PB-induced increase in p27Kip1, leading to a decrease in the activity of cyclin-dependent kinase 2 (CDK2), a positive regulator of the G1-S-phase cell cycle transition. Consistent with the decreased CDK2 kinase activity, we also observed a decrease in the phosphorylation state of the retinoblastoma protein after PB treatment. This was associated with increased binding and consequent inactivation of E2F, a transactivator of genes that regulate the G1 to S phase cell cycle transition. These data suggest that the differentiation agent PB inhibits tumor growth by limiting the availability of active E2F, with a subsequent G1-S-phase block. Additional studies should show whether PB is a clinically effective therapeutic agent against colorectal cancer.