Elevated cyclic AMP levels induce a rapid block in the mid-G1 phase of the cell cycle in B-lymphoid Reh cells, accompanied by a transient block in G2. The retinoblastoma (Rb) gene product has been implicated as a key regulator of eukaryotic cell growth. The Rb protein enforces its growth-suppressive effect in early G1, where it is underphosphorylated and firmly bound in the nucleus. A possible link between the cyclic AMP-mediated growth arrest and regulation of Rb protein phosphorylation was explored by Western blot analysis. We found that both forskolin and 8-(4-chlorophenylthio)adenosine 3':5'-cyclic monophosphate induced a rapid (within 3 h) dephosphorylation of Rb protein. These data were confirmed by flow-cytometric analysis of isolated nuclei costained with anti-Rb antibodies and propidium iodide. The percentage of cells containing underphosphorylated Rb protein (i.e., G1 nuclei with bound Rb protein) increased from 9 to 87% after 4 h of forskolin treatment. During the first 4 h of forskolin treatment, the cells were transiently blocked in the G2 phase of the cell cycle, and virtually no cells had passed through mitosis. The increased level of dephosphorylated Rb protein at 4 h was therefore not due to an accumulation in early G1 of cells containing underphosphorylated Rb protein. Instead, our data indicated that dephosphorylation of Rb protein occurred in cells that had already passed the point in G1 of Rb protein phosphorylation. Dephosphorylation of Rb protein was prevented by high concentrations of the protein phosphatase inhibitor okadaic acid, indicating that activation of a phosphatase is involved in the cyclic AMP-mediated dephosphorylation of Rb protein. We suggest that the dephosphorylation of Rb protein is required for the forskolin-mediated arrest of the Reh cells in mid-G1.