Human T-cell lymphotropic virus type 1 (HTLV-1) is associated with adult T-cell leukemia (ATL) and HTLV-1-associated myelopathy/tropical spastic paraparesis (HAM/TSP). T-cell transformation is mainly due to the actions of the viral phosphoprotein Tax. Tax interacts with multiple transcriptional factors, aiding the transcription of many cellular genes. Here, we report that the cyclin-dependent kinase inhibitor p21/waf1 is overexpressed in all HTLV-1-infected cell lines tested as well as in ATL and HAM/TSP patient samples. Tax was found to be able to transactivate the endogenous p21/waf1 promoter, as detected by RNase protection, as well as activate a series of wild-type and 5'-deletion constructs linked to a luciferase reporter cassette. Wild-type but not a mutant form of Tax (M47) transactivated the p21/waf1 promoter in a p53-independent manner and utilized a minimal promoter that contained E2A and TATA box sequences. The p21/waf1 protein was reproducibly observed to be complexed with cyclin A/cdk2 and not with any other known G(1), S, or G(2)/M cyclins. Functionally, the association of p21/cyclin A/cdk2 decreased histone H1 phosphorylation in vitro, as observed in immunoprecipitations followed by kinase assays, and affected other substrates, such as the C terminus of Rb protein involved in c-Abl and histone deacetylase-1 (HDAC1) regulation. Interestingly, upon the use of a stress signal, such as gamma-irradiation, we found that the p21/cyclin A/cdk2 complex was able to block all known phosphorylation sites on the Rb molecule. Finally, using elutriated cell cycle fractions and a stress signal, we observed that the HTLV-1-infected T cells containing wild-type Tax, which had been in early or mid-G(1) phase prior to gamma-irradiation, arrested in G(1) and did not undergo apoptosis. This may be an important mechanism for an oncogenic virus such as HTLV-1 to stop the host at the G(1)/S boundary and to repair the damaged DNA upon injury, prior to S-phase entry.