INSM1 is a zinc finger transcription factor that plays an important role in pancreatic beta-cell development. To further evaluate its role in cell fate determination, we investigated INSM1 effects on cell cycle function. The cyclin box of cyclin D1 is essential for INSM1 binding. Competitive pull-down and co-immunoprecipitation revealed that INSM1 binding to cyclin D1 interrupts its association with CDK4 and induces hypophosphorylation of the retinoblastoma protein. An inducible Tet-on system was established in Cos-7 and Panc-1 cells. Using serum starvation, we synchronized the cell cycle and subsequently induced cell cycle progression by serum stimulation. Comparison of the INSM1 induction group with the noninduced control group, INSM1 ectopic expression causes cell cycle arrest, whereas the INSM1-mediated cell cycle arrest could be reversed by cyclin D1 and CDK4 overexpression. The proline-rich N-terminal portion of INSM1 is required for cyclin D1 binding. Mutation of proline residues abolished cyclin D1 binding and also diminished its ability to induce cell cycle arrest. Cellular proliferation of Panc-1 cells was inhibited by INSM1 overexpression demonstrated by 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide assay, soft agar colony formation, as well as tumor growth in a nude mouse model. Taken together, we provide evidence to support that INSM1 binds to cyclin D1, interrupts cell cycle signaling, and inhibits cellular proliferation.