In normal T-cell development interleukin-7 (IL-7) functions as an antiapoptotic factor by regulating bcl-2 expression in immature thymocytes and mature T cells. Similar to what occurs in normal immature thymocytes, prevention of spontaneous apoptosis by IL-7 in precursor T-cell acute lymphoblastic leukemia (T-ALL) cells correlates with up-regulation of bcl-2. IL-7 is also implicated in leukemogenesis because IL-7 transgenic mice develop lymphoid malignancies, suggesting that IL-7 may regulate the generation and expansion of malignant cells. This study shows that in the presence of IL-7, T-ALL cells not only up-regulated bcl-2 expression and escaped apoptosis but also progressed in the cell cycle, resulting in sequential induction of cyclin D2 and cyclin A. Down-regulation of p27kip1 was mandatory for IL-7-mediated cell cycle progression and temporally coincided with activation of cyclin-dependent kinase (cdk)4 and cdk2 and hyperphosphorylation of Rb. Strikingly, forced expression of p27kip1 in T-ALL cells not only prevented cell cycle progression but also reversed IL-7-mediated up-regulation of bcl-2 and promotion of viability. These results show for the first time that a causative link between IL-7-mediated proliferation and p27kip1 down-regulation exists in malignant T cells. Moreover, these results suggest that p27kip1 may function as a tumor suppressor gene not only because it is a negative regulator of cell cycle progression but also because it is associated with induction of apoptosis of primary malignant cells.