Leukemia cells bearing the Philadelphia (Ph) chromosome express a Bcr-Abl fusion protein with deregulated protein tyrosine kinase (PTK) activity, which plays a central role in the malignant transformation. Many different signal transduction pathways are activated by Bcr-Abl, but little is known about their downstream targets in specific cell lineages. We show here that Ph-positive cell lines as well as primary cells derived from chronic myeloid leukemia (CML) in lymphoid blast crisis or from acute lymphoblastic leukemia (ALL) consistently express high levels of cyclin D2, whereas expression of this protein is low or absent in comparable Ph-negative lines and Ph-positive myeloid lines. Inhibition of Bcr-Abl with STI571 resulted in down-regulation of cyclin D2 and reduction of the number of cells in S phase, although complete G1 arrest was not induced. The expression of cyclin D2 in Ph-positive lymphoblasts was mediated via the phosphatidyl-inositol-3 kinase pathway. Analogous results were seen in murine BaF/3 cells transfected with a BCR-ABL expression vector. In contrast to the human cell lines, murine Baf/BCR-ABL cells exposed to STI571 inhibitor were all arrested in G1. This arrest could be abrogated by exogenous expression of cyclin D2 from a transfected cDNA construct. We conclude that a direct connection exists between Bcr-Abl PTK activity and cell cycle progression in which cyclin D2 plays a critical role. However, cell cycle progression in human Ph-positive lymphoid cells is not entirely dependent on Bcr-Abl PTK, and additional genetic lesions must be present.