Transcription factors derived from CCAAT/enhancer binding protein (C/EBP)α and C/EBPβ genes control differentiation and proliferation in a number of cell types. Various C/EBP isoforms arise from unique C/EBPβ and C/EBPα mRNAs by differential initiation of translation. These isoforms retain different parts of the amino terminus and therefore display different functions in gene regulation and proliferation control. We show that PKR and mTOR signaling pathways control the ratio of C/EBP isoform expression through the eukaryotic translation initiation factors eIF-2α and eIF-4E, respectively. An evolutionary conserved upstream open reading frame in C/EBPα and C/EBPβ mRNAs is a prerequisite for regulated initiation from the different translation initiation sites and integrates translation factor activity. Deregulated translational control leading to aberrant C/EBPα and C/EBPβ isoform expression or ectopic expression of truncated isoforms disrupts terminal differentiation and induces a transformed phenotype in 3T3-L1 cells. Our results demonstrate that the translational controlled ratio of C/EBPα and C/EBPβ isoform expression determines cell fate.