It has been suggested that binding of p27 and p21 kinase inhibitory proteins (KIPs) to cyclin-dependent kinases (cdks) render them inaccessible to cdk-activating kinase (CAK), presumably by steric hindrance by the C-terminal residues. However, this common mechanism of inhibition is inconsistent with the known structural divergence in the p27 and p21 C-terminal domains. Therefore, we studied the direct binding of N-terminal minimal domain of p27 (amino acids 28-81) to cdk2/cyclin E. An unlabeled p27 minimal domain, mutated in the N-terminal LFG; moth, was unable to compete with a labeled minimal domain for binding to cdk2/cyclin E. The p27 and its minimal domain inhibited CAK-mediated phosphorylation of cdk2/cyclin E. This inhibitory effect was significantly diminished with p27 minimal domain mutated in the LFG motif. A synthetic peptide, ACRRLFGPVDSE, from the N-terminal residues 17-28 of p21, was also a potent inhibitor of CAK-mediated cdk2/cyclin E phosphorylation. Taken together, these results show that anchoring of p27 or p21 KIPs to cyclin E via the N-terminal LFG-containing motif can block CAK access to its cdk2/cyclin E substrate.