Introduction of an exogenous retlnoblastoma (RB) gene in M-deficient retinoblastoma or osteosarcoma cells has been shown to suppress their neoplastic phenotype. In experiments designed to explore the potential mechanism of R/3 tumor suppression, we report here that the phosphorylation state of RB protein is modulated during normal cellular events. In resting cells, RB protein is present in its least phosphorylated form; in rapldly proliferating cells, RB protein is highly phosphorylated. Maximal phosphorylatlon is associated with S phase of the cell cycle. Induction of differentiation in several human leukemia cell lines by treatment with phorbol ester or retinoic acid leads to dephosphorylation of RB. Time course studies indicate that RB dephosphorylatlon precedes the total arrest of cell growth during differentiation. These observations strongly suggest that the function of RB protein is modulated by a phosphorylationldephosphorylation mechanism during cell proliferation and differentiation.