Id proteins are negative regulators of basic helix-loop-helix (bHLH) transcription factors. In this study, we compared the expression of Id2 mRNA in proliferating (fetal) and nonproliferating (adult) alveolar epithelial cells (AECs). The expression of Id2 was higher in adult AECs than in the corresponding fetal cells, suggesting that Id2 might play a functional role in developmental regulation of lung epithelial cell proliferation. By screening a mouse embryo cDNA library in the yeast two-hybrid system, Id2 was identified as a self-associating protein. Structural analysis by deletion and site-directed mutagenesis demonstrated that the HLH domain and a cysteine residue within the HLH domain are essential for Id2 homodimerization. Furthermore, in vitro synthesized Id2 homodimers became monomers under reducing conditions, indicating that the formation of an intermolecular disulfide bond is critical for Id2 homodimerization. Transient transfection assays in A549 cells showed that wildtype Id2 down-regulated the activity of the cyclin A promoter by 70%, while mutating the cysteine critical for Id2 homodimerization abolished the inhibitory effect of wild-type Id2.