The cyclin-dependent kinase inhibitor p27(KIP1) is a tumor suppressor gene in mice, and loss of p27 protein is a negative prognostic indicator in human cancers. Unlike other tumor suppressors, the p27 gene is rarely mutated in tumors. Therefore misregulation of p27, rather than loss of the gene, is responsible for tumor-associated decreases in p27 protein levels. We performed a functional genomic screen in p27(+/-) mice to identify genes that regulate p27 during lymphomagenesis. This study demonstrated that decreased p27 expression in tumors resulted from altered transcription of the p27 gene, and the retroviral tagging strategy enabled us to pinpoint relevant transcription factors. inhibitor of DNA binding 3 (Id3) was isolated and validated as a transcriptional repressor of p27. We further demonstrated that p27 was a downstream target of Id3 in src-family kinase Lck-driven thymic lymphomagenesis and that p27 was an essential regulator of Lck-dependent thymic maturation during normal T-cell development. Thus, we have identified and characterized transcriptional repression of p27 by Id3 as a new mechanism decreasing p27 protein in tumors.