Neuroblastoma (NB) is an embryonal tumor and possesses a unique propensity to exhibit either a spontaneous regression or an unrestrained growth. However, the underlying mechanism for this paradoxical clinical outcome remains largely unclear. Quantitative RT-PCR analysis on 102 primary NB tumors revealed that lower Krüppel-like factor 4 (KLF4) expression is frequently found in the unfavorable NB (Mann-Whitney test, P=0.027). In particular with the high-risk factors such as age of patient >1 year, MYCN amplification and low TRKA expression, the decreased expression of KLF4 was significantly associated with an unfavorable NB outcome. Despite knockdown of KLF4 alone is not sufficient to increase tumorigenicity of NB cells in vivo, stable expression of KLF4 short hairpin RNA in Be(2)-C cells significantly promoted growth of NB cells and inhibited cell differentiation toward fibromuscular lineage. In concordant with these observations, overexpression of KLF4 in SH-SY-5Y cells profoundly suppressed cell proliferation by direct upregulation of cell-cycle inhibitor protein p21(WAF1/CIP1), and knocking down p21(WAF1/CIP1) could partially rescue the suppressive effect of KLF4. Importantly, KLF4 overexpressing cells have lost their neuroblastic phenotypes, they were epithelial-like, strongly substrate-adherent, expressing smooth muscle marker and became non-tumorigenic, suggesting that KLF4 expression is crucial for lineage determination of NB cells, probably, favoring spontaneous tumor regression. Subsequent global gene expression profiling further revealed that transforming growth factor beta (TGFβ) and cell-cycle pathways are highly dysregulated upon KLF4 overexpression, and myogenic modulators, MEF2A and MYOD1 were found significantly upregulated. Taken together, we have demonstrated that KLF4 contributes to the favorable disease outcome by directly mediating the growth and lineage determination of NB cells.