The helix–loop–helix (HLH) protein Id2 is thought to affect the balance between cell growth and differentiation by negatively regulating the function of basic‐helix–loop–helix (bHLH) transcription factors. Id2 acts by forming heterodimers that are unable to bind to specific (E‐box) DNA sequences. Here we show that this activity can be overcome by phosphorylation of a serine residue within a consensus target site for cyclin‐dependent kinases (Cdks). In vitro, Id2 can be phosphorylated by either cyclin E‐Cdk2 or cyclin A‐Cdk2 but not by cyclin D‐dependent kinases. Analogous phosphorylation occurs in serum‐stimulated human diploid fibroblasts at a time in late G 1 consistent with the appearance of active cyclin E–Cdk2. The phosphorylation of Id2 in these cells correlates with the restoration of a distinct E‐box‐dependent DNA‐binding complex, suggesting that the levels of this complex are modulated by both the abundance and phosphorylation status of Id2. These data provide a link between cyclin‐dependent kinases and bHLH transcription factors that may be critical for the regulation of cell proliferation and differentiation.