Using a gain-of-function screen in Drosophila, we identified the Krüppel-like factor Cabut (Cbt) as a positive regulator of cell cycle gene expression and cell proliferation. Enforced cbt expression is sufficient to induce an extra cell division in the differentiating fly wing or eye, and also promotes intestinal stem cell divisions in the adult gut. Although inappropriate cell proliferation also results from forced expression of the E2f1 transcription factor or its target, Cyclin E, Cbt does not increase E2F1 or Cyclin E activity. Instead, Cbt regulates a large set of E2F1 target genes independently of E2F1, and our data suggest that Cbt acts via distinct binding sites in target gene promoters. Although Cbt was not required for cell proliferation during wing or eye development, Cbt is required for normal intestinal stem cell divisions in the midgut, which expresses E2F1 at relatively low levels. The E2F1-like functions of Cbt identify a distinct mechanism for cell cycle regulation that may be important in certain normal cell cycles, or in cells that cycle inappropriately, such as cancer cells.