Deregulation of the cell cycle is a common strategy employed by many DNA and RNA viruses to trap and exploit the host cell machinery toward their own benefit. In many coronaviruses, the nucleocapsid protein (N protein) has been shown to inhibit cell cycle progression although the mechanism behind this is poorly understood. The N protein of severe acute respiratory syndrome-coronavirus (SARS-CoV) bears signature motifs for binding to cyclin and phosphorylation by cyclin-dependent kinase (CDK) and has recently been reported by us to get phosphorylated by the cyclin-CDK complex (Surjit, M., Kumar, R., Mishra, R. N., Reddy, M. K., Chow, V. T., and Lal, S. K. (2005) J. Virol. 79, 11476-11486). In the present study, we prove that the N protein of SARS-CoV can inhibit S phase progression in mammalian cell lines. N protein expression was found to directly inhibit the activity of the cyclin-CDK complex, resulting in hypophosphorylation of retinoblastoma protein with a concomitant down-regulation in E2F1-mediated transactivation. Coexpression of E2F1 under such conditions could restore the expression of S phase genes. Analysis of RXL and CDK phosphorylation mutant N protein identified the mechanism of inhibition of CDK4 and CDK2 activity to be different. Whereas N protein could directly bind to cyclin D and inhibit the activity of CDK4-cyclin D complex; inhibition of CDK2 activity appeared to be achieved in two different ways: indirectly by down-regulation of protein levels of CDK2, cyclin E, and cyclin A and by direct binding of N protein to CDK2-cyclin complex. Down-regulation of E2F1 targets was also observed in SARS-CoV-infected VeroE6 cells. These data suggest that the S phase inhibitory activity of the N protein may have major significance during viral pathogenesis.