GATA-1 is a tissue-specific DNA-binding protein containing two zinc-finger-like domains. It is expressed predominantly in erythrocytes. Consensus binding sites for GATA-1 have been found in the regulatory elements of all erythroid-specific genes examined. GATA-1 protein is required for erythroid differentiation beyond the proerythroblast stage. In this paper, we demonstrate that the overexpression of GATA-1 in murine erythroleukaemia (MEL) cells alleviates DMSO-induced terminal erythroid differentiation. Hence, there is no induction of globin gene transcription and the cells do not arrest in the G1 phase of the cell cycle. Furthermore, we demonstrate that expression of GATA-1 in non-transformed erythroid precursors also affects their proliferative capacity and terminal differentiation, as assayed by adult globin gene transcription. To gain insight into the mechanism of this effect, we studied the levels and activities of regulators of cell-cycle progression during DMSO-induced differentiation. A decrease in cyclin D-dependent kinase activity was observed during the induction of both control and GATA-1-overexpressing MEL cells. However, cyclin E-dependent kinase activity decreased more than 20-fold in control but less than 2-fold in GATA-1-overexpressing MEL cells upon induction. Thus GATA-1 may exert its effects by regulating cyclin E-dependent kinase activity. We also show that GATA-1 binds to the retinoblastoma protein in vitro, but not to the related protein p107, which may indicate that GATA-1 interacts directly with specific members of the cell-cycle machinery in vivo. We conclude that GATA-1 regulates cell fate, in terms of differentiation or proliferation, by affecting the cell-cycle apparatus.