The lymphoid enhancer factor 1/T cell factor (LEF/TCF) family of transcription factors are downstream effectors of the WNT signaling pathway, which drives colon tumorigenesis. LEF/TCFs have a DNA sequence-specific high-mobility group (HMG) box that binds Wnt response elements (WREs). The "E tail" isoforms of TCFs are alternatively spliced to include a second DNA binding domain called the C-clamp. We show that induction of a dominant negative C-clamp version of TCF1 (dnTCF1E) induces p21 expression and a stall in the growth of DLD1 colon cancer cells. Induction of a C-clamp mutant did not efficiently induce p21, nor did it stall cell growth. Microarray analysis revealed that induction of p21 by wild-type dnTCF1E (dnTCF1E(WT)) correlated with a decrease in expression of multiple p21 suppressors that act at multiple levels from transcription (SP5, YAP1, and RUNX1), RNA stability (MSI2), and protein stability (CUL4A). We show that the C-clamp is a sequence-specific DNA binding domain that can make contacts with 5'-RCCG-3' elements upstream or downstream of WREs. The C-clamp-RCCG interaction was critical for TCF1E-mediated transcriptional control of p21-connected target gene promoters. Our results indicate that a rapid-response WNT/p21 circuit is driven by C-clamp target gene selection.