We previously identified and characterized E2F-associated phospho-protein (EAPP), a nuclear phosphoprotein that interacts with the activating members of the E2F transcription factor family. EAPP levels are frequently elevated in transformed human cells. To examine the biological relevance of EAPP, we studied its properties in stressed and unstressed cells. Overexpression of EAPP in U2OS cells increased the fraction of G1 cells and lead to heightened resistance against DNA damage- or E2F1-induced apoptosis in a p21-dependent manner. EAPP itself becomes upregulated in confluent cells and after DNA damage and stimulates the expression of p21 independently of p53. It binds to the p21 promoter and seems to be required for the assembly of the transcription initiation complex. RNAi-mediated knockdown of EAPP expression brought about increased sensitivity towards DNA damage and resulted in apoptosis even in the absence of stress. Our results indicate that the level of EAPP is critical for cellular homeostasis. Too much of it results in G1 arrest and resistance to apoptosis, which, paradoxically, might favor cellular transformation. Too little EAPP seems to retard the expression not only of the p21 gene, but also of a number of other genes and ultimately results in apoptosis.