Hepatocyte growth factor (HGF) has an anti-proliferative effect on many types of tumor cell lines and tumors in vivo. We found previously that inhibition of HGF-induced proliferation in HepG2 hepatoma cells is caused by cell cycle arrest at G1 through a high intensity ERK signal, which represses Cdk2 activity. To examine further the mechanisms of G1 arrest by HGF, we analyzed the Cdk inhibitor p16(INK4a), which has an anti-proliferative function through cell cycle arrest at G1. We found that HGF treatment drastically increased endogenous p16 levels. Knockdown of p16 with small interfering RNA reversed the arrest, indicating that the induction of p16 is required for G1 arrest by HGF. Analysis of the promoter of the human p16 gene identified the proximal Ets-binding site as a responsive element for HGF, and this responded to the high intensity ERK signal. HGF treatment of the cells led to a redistribution of p21(CIP1) and p27(KIP1) from Cdk4 to Cdk2. The redistribution was blocked by the knockdown of p16 with small interfering RNA, which restored the Cdk2 activity repressed by HGF, demonstrating the requirement of p16 induction for the redistribution and eventual repression of Cdk2 activity. Our results reveal a signaling pathway for G1 arrest induced by HGF.