Full-length (42 kDa) CCAAT/enhancer binding protein alpha (C/EBP alpha) (p42) has been implicated in the transcriptional activation of adipocyte genes including the 422(aP2) and C/EBP alpha genes during differentiation of 3T3-L1 preadipocytes. We have identified a 30-kDa isoform (p30) of C/EBP alpha that is expressed by 3T3-L1 adipocytes, mouse adipose tissue, and rat liver. In vitro translation of wild-type C/EBP alpha mRNA or transient transfection with a wild-type C/EBP alpha vector gave rise to similar levels of p42 and p30. Mutational analysis revealed that p30 is an alternative translation product initiated at the third in-frame methionine codon of the C/EBP alpha message. p30C/EBP alpha binds to the C/EBP sites within and activates reporter gene expression driven by the 422(aP2) and C/EBP alpha gene promoters. Although transfection of 3T3-L1 preadipocytes with a strong p30C/EBP alpha expression vector is insufficient to induce differentiation, this vector advances the differentiation program. Unlike p42C/EBP alpha, which inhibits cell proliferation, p30C/EBP alpha is not antimitotic. Thus, the N-terminal 12-kDa segment of full-length C/EBP alpha contains an amino acid sequence necessary for antimitotic activity. During differentiation of 3T3-L1 preadipocytes and during hepatocyte development, the cellular p42C/EBP alpha/p30C/EBP alpha ratio changes, raising the possibility of a regulatory role.