BACKGROUND & AIMS: The ubiquitously expressed basic helix-loop-helix transcription factor ITF-2B has an important role in differentiation processes, and its transcription is regulated by beta-catenin. The ITF-2 gene is located in the chromosomal region 18q21; allelic loss of this locus occurs in 70% of colorectal cancers. We analyzed the expression, regulation, and function of ITF-2B in colorectal carcinogenesis. METHODS: The loss-of-heterozygosity (LOH) status of 18q21 and expression of ITF-2B were studied in colorectal carcinomas using polymerase chain reaction-based methods and immunohistochemistry. The biologic effects of ITF-2B were studied in colorectal cancer cells. Reporter gene assays and chromatin immunoprecipitation were utilized to analyze effects of ITF-2B on gene transcription. RESULTS: ITF-2B is strongly expressed in colon adenomas but frequently down-regulated in carcinomas because of LOH at 18q21. ITF-2B induces cell cycle arrest and regulates the expression of p21(Cip1) via newly identified E-boxes in the CDKN1A gene, independently of p53. Loss of ITF-2B expression correlates with loss of p21(Cip1) expression in primary colon carcinomas. CONCLUSIONS: Accumulation of mutations and allelic losses are driving forces of colorectal carcinogenesis. ITF-2B, which is up-regulated during early colorectal carcinogenesis because of loss of adenomatous polyposis coli, is a target for LOH on chromosome 18q, along with deleted in colorectal carcinoma and Smad4. This finding, along with the fact that ITF-2B is a regulator of the key cell cycle inhibitor p21(Cip1), indicates that ITF-2B is a tumor suppressor that has an important function at the adenoma to carcinoma transition.