The Cip/Kip family of cyclin-dependent kinase inhibitors (CKIs) has been implicated in mediating cell cycle arrest prior to terminal differentiation. In many instances, increased expression of CKIs immediately precedes mitotic arrest. However, the mechanism that activates CKI expression in cells that are about to stop dividing has remained elusive. Here we have addressed this issue by investigating the expression pattern of dacapo, a Cip/Kip CKI in Drosophila. We show that the accumulation of dacapo RNA and protein requires Cyclin E and that increased expression of Cyclin E can induce dacapo expression. We also show that the oscillation of the Cyclin E and Dacapo proteins are tightly coupled during ovarian endocycles. Our results argue for a mechanism where Cyclin E/Cdk activity induces Dacapo expression but only within certain windows that are permissive for dacapo expression.