Proinsulin C-peptide is internalized into cells, but a function of its intracellular localization has not been established. We now demonstrate that, upon cellular entry, C-peptide is localized to the nucleoli, where it promotes transcription of genes encoding for ribosomal RNA. We find that C-peptide binds to histones and enhances acetylation of lysine residue 16 of histone H4 at the promoter region of genes for ribosomal RNA. In agreement with synchrony of ribosomal RNA synthesis and cell proliferation, we show that C-peptide stimulates proliferation in chondrocytes and HEK-293 cells. This regulation of ribosomal RNA provides a mechanism by which C-peptide can exert transcriptional effects and implies that the peptide has growth factor activity.