The serine/threonine kinase, Pim-1, appears to be involved in regulating proliferation, differentiation and cell survival of lymphoid and myeloid cells. In this study, we have found that amino acid residues 140–147 (RKRRQTSM) at the C-terminal end of p21^Cip1/WAF1, a cyclin-dependent kinase (CDK) inhibitor, constitute an ideal phosphorylation consensus sequence for Pim-1. We demonstrate that Pim-1 efficiently phosphorylates this peptide sequence as well as the p21 protein in vitro. We also demonstrate by pull-down assay and by immunoprecipitation that Pim-1 associates with p21. During phorbol ester-induced differentiation of U937 cells, both Pim-1 and p21 expression levels increase with Pim-1 levels increasing in both the nucleus and cytoplasm while p21 remains primarily cytoplasmic. Co-transfection of wild type p21 with wild type Pim-1 results in cytoplasmic localization of p21 while co-transfection of wild type p21 with kinase dead Pim-1 results in nuclear localization of p21. Consistent with the results from the phosphoamino acid assay, Pim-1 phosphorylates transfected p21 only on Thr¹⁴⁵ in p21-deficient human fibroblasts and this phosphorylation event results in the cytoplasmic localization of p21. These findings demonstrate that Pim-1 associates with and phosphorylates p21 in vivo, which influences the subcellular localization of p21.