The mammalian DAF-16-like transcription factors, FKHR, FKHRL1, and AFX, function as key regulators of insulin signaling, cell cycle progression, and apoptosis downstream of phosphoinositide 3-kinase. Gene activation through binding to insulin response sequences (IRS) has been thought to be essential for mediating these functions. However, using transcriptional profiling, chromatin immunoprecipitation, and functional experiments, we demonstrate that rather than activation of IRS regulated genes (Class I transcripts), transcriptional repression of D-type cyclins (in Class III) is required for FKHR mediated inhibition of cell cycle progression and transformation. These data suggest that a novel mechanism of FKHR-mediated gene regulation is linked to its activity as a suppressor of tumor growth.