Pescadillo (PES1) and the upstream binding factor (UBF1) play a role in ribosome biogenesis, which regulates cell size, an important component of cell proliferation. We have investigated the effects of PES1 and UBF1 on the growth and differentiation of cell lines derived from 32D cells, an interleukin-3 (IL-3)-dependent murine myeloid cell line. Parental 32D cells and 32D IGF-IR cells (expressing increased levels of the type 1 insulin-like growth factor I [IGF-I] receptor [IGF-IR]) do not express insulin receptor substrate 1 (IRS-1) or IRS-2. 32D IGF-IR cells differentiate when the cells are shifted from IL-3 to IGF-I. Ectopic expression of IRS-1 inhibits differentiation and transforms 32D IGF-IR cells into a tumor-forming cell line. We found that PES1 and UBF1 increased cell size and/or altered the cell cycle distribution of 32D-derived cells but failed to make them IL-3 independent. PES1 and UBF1 also failed to inhibit the differentiation program initiated by the activation of the IGF-IR, which is blocked by IRS-1. 32D IGF-IR cells expressing PES1 or UBF1 differentiate into granulocytes like their parental cells. In contrast, PES1 and UBF1 can transform mouse embryo fibroblasts that have high levels of endogenous IRS-1 and are not prone to differentiation. Our results provide a model for one of the theories of myeloid leukemia, in which both a stimulus of proliferation and a block of differentiation are required for leukemia development.