A member of the Forkhead transcription factor family, FKHRL1, lies downstream of the phosphatidylinositol 3-kinase-Akt activation pathway in cytokine signaling. Because the phosphatidylinositol 3-kinase-Akt activation pathway is required for BCR-ABL-mediated transformation and survival signaling in chronic myelogenous leukemia (CML), in this study we examined the involvement of FKHRL1 in the BCR-ABL-mediated signaling pathway. FKHRL1 was constitutively phosphorylated in BCR-ABL-expressing cell lines KCL22 and KU812, and its phosphorylation was inhibited by treatment with STI571, a specific inhibitor of BCR-ABL tyrosine kinase. Concomitantly, STI571 induced cell cycle arrest at the G(0)/G(1) phase, accompanied by up-regulation of a cyclin-dependent kinase inhibitor p27/Kip1 in KCL22 cells. In addition, FKHRL1 was constitutively phosphorylated in the TF-1/bcr-abl cell line ectopically expressing BCR-ABL but not in the parent TF-1 cell line. Considering several lines of evidence that phosphorylated FKHRL1 has lost transcriptional activity and that p27/Kip1 expression is positively regulated by dephosphorylated "active" FKHRL1, BCR-ABL may down-regulate p27/Kip1 expression via the loss of FKHRL1 function as a transcription factor. To demonstrate this hypothesis, we generated a tamoxifen-inducible "active FKHRL1" FKHRL1-TM (a triple mutant of FKHRL1, in which all three Akt phosphorylation sites have been mutated), estrogen receptor system in the KCL22 cell line. The addition of tamoxifen inhibited the cell growth indicating that overexpression of FKHRL1 in the nucleus antagonized deregulated proliferation of CML cells. Collectively, FKHRL1 regulates the expression of p27/Kip1 as a downstream molecule of BCR-ABL signaling in CML cells. BCR-ABL-induced loss of FKHRL1 function may be involved in oncogenic transformation of CML partially via the down-regulation of p27/Kip1 proteins.