We have recently reported that the geranylgeranyltransferase I inhibitor GGTI-298 arrests human tumor cells at the G₁phase of the cell cycle and increases the protein and RNA levels of the cyclin-dependent kinase inhibitor p21^WAF1/CIP1. Here, we show that GGTI-298 acts at the transcriptional level to induce p21^WAF1/CIP1 in a human pancreatic carcinoma cell line, Panc-1. This upregulation of p21^WAF1/CIP1 promoter was selective, since GGTI-298 inhibited serum responsive element- and E2F-mediated transcription. A functional analysis of the p21^WAF1/CIP1 promoter showed that a GC-rich region located between positions −83 and −74, which contains a transforming growth factor β-responsive element and one Sp1-binding site, is sufficient for the upregulation of p21^WAF1/CIP1 promoter by GGTI-298. Electrophoretic mobility shift assays showed a small increase in the amount of DNA-bound Sp1-Sp3 complexes. Furthermore, the analysis of Sp1 transcriptional activity in GGTI-298-treated cells by using GAL4-Sp1 chimera or Sp1-chloramphenicol acetyltransferase reporter revealed a significant increase in Sp1-mediated transcription. Moreover, GGTI-298 treatment also resulted in increased Sp1 and Sp3 phosphorylation. These results suggest that GGTI-298-mediated upregulation of p21^WAF1/CIP1 involves both an increase in the amount of DNA-bound Sp1-Sp3 and enhancement of Sp1 transcriptional activity. To identify the geranylgeranylated protein(s) involved in p21^WAF1/CIP1 transcriptional activation, we analyzed the effects of the small GTPases Rac1 and RhoA on p21^WAF1/CIP1 promoter activity. The dominant negative mutant of RhoA, but not Rac1, was able to activate p21^WAF1/CIP1. In contrast, constitutively active RhoA repressed p21^WAF1/CIP1. Accordingly, the ADP-ribosyl transferase C3, which specifically inhibits Rho proteins, enhanced the activity of p21^WAF1/CIP1. Taken together, these results suggest that one mechanism by which GGTI-298 upregulates p21^WAF1/CIP1 transcription is by preventing the small GTPase RhoA from repressing p21^WAF1/CIP1induction.