p55PIK, a regulatory subunit of phosphatidylinositol 3-kinases, promotes cell cycle progression by interacting with cell cycle modulators such as retinoblastoma protein (Rb) via its unique amino-terminal 24 amino-acid residue (N24). Overexpression of N24 specifically inhibits these interactions and leads to cell cycle arrest. Herein, we describe the generation of a fusion protein (Tat transactivator protein (TAT)-N24) that contains the protein transduction domain and N24, and examined its effects on the proliferation and differentiation of leukemia cells. TAT-N24 not only blocks cell proliferation but remarkably induces differentiation of leukemia cells in vitro and in vivo. Systemically administered TAT-N24 also significantly decreases growth of leukemia cell tumors in animal models. Furthermore, overexpression of p55PIK in leukemia cells leads to increased proliferation; however, TAT-N24 blocks this effect and concomitantly induces differentiation. There is significant upregulation of p55PIK mRNA and protein expression in leukemia cells from patients. TAT-N24 inhibits cell cycle progression and induces differentiation of bone marrow cells derived from patients with several different types of leukemia. These results show that cell-permeable N24 peptide induces leukemia cell differentiation and suggest that p55PIK may be a novel drug target for the treatment of hematopoetic malignancies.