We report that cyclin D3/cdk4 kinase activity is regulated by p27(kip1) in BALB/c 3T3 cells. The association of p27(kip1) was found to result in inhibition of cyclin D3 activity as measured by immune complex kinase assays utilizing cyclin D3-specific antibodies. The ternary p27(kip1)/cyclin D3/cdk4 complexes do exhibit kinase activity when measured in immune complex kinase assays utilizing p27(kip1)-specific antibodies. The association of p27(kip1) with cyclin D3 was highest in quiescent cells and declined upon mitogenic stimulation, concomitantly with declines in the total level of p27(kip1) protein. The decline in this association could be elicited by PDGF treatment alone; this was not sufficient, however, for activation of cyclin D3 activity, which also required the presence of factors in platelet-poor plasma in the culturing medium. Unlike cyclin D3 activity, which was detected only in growing cells, p27(kip1) kinase activity was present throughout the cell cycle. Since we found that the p27(kip1) activity was dependent on cyclin D3 and cdk4, we compared the substrate specificity of the active ternary complex containing p27(kip1) and the active cyclin D3 lacking p27(kip1) by tryptic phosphopeptide mapping of GST-Rb phosphorylated in vitro and also by comparing the relative phosphorylation activity toward a panel of peptide substrates. We found that ternary p27(kip1)/cyclin D3/cdk4 complexes exhibited a different specificity than the active binary cyclin D3/cdk4 complexes, suggesting that p27(kip1) has the capacity to both inhibit cyclin D/cdk4 activity as well as to modulate cyclin D3/cdk4 activity by altering its substrate preference.