HTLV-1 Tax can induce senescence by up-regulating the levels of cyclin-dependent kinase inhibitors p21^CIP1/WAF1 and p27^KIP1. Tax increases p27^KIP1 protein stability by activating the anaphase promoting complex/cyclosome (APC/C) precociously, causing degradation of Skp2 and inactivation of SCF^Skp2, the E3 ligase that targets p27^KIP1. The rate of p21^CIP1/WAF1 protein turnover, however, is unaffected by Tax. Rather, the mRNA of p21^CIP1/WAF1 is greatly up-regulated. Here we show that Tax increases p21 mRNA expression by transcriptional activation and mRNA stabilization. Transcriptional activation of p21^CIP1/WAF1 by Tax occurs in a p53-independent manner and requires two tumor growth factor-β-inducible Sp1 binding sites in the -84 to -60 region of the p21^CIP1/WAF1 promoter. Tax binds Sp1 directly, and the CBP/p300-binding activity of Tax is required for p21^CIP1/WAF1 trans-activation. Tax also increases the stability of p21^CIP1/WAF1 transcript. Several Tax mutants trans-activated the p21 promoter, but were attenuated in stabilizing p21^CIP1/WAF1 mRNA, and were less proficient in increasing p21^CIP1/WAF1 expression. The possible involvement of Tax-mediated APC/C activation in p21^CIP1/WAF1 mRNA stabilization is discussed.