Stimulation of the phenotypically immature B cell lymphoma WEHI-231 with anti-IgM induces G1 arrest followed by apoptotic cell death, which can be reversed by stimulation via the CD40 receptor. Here, we show that cells expressing bcl-xL (WEHI-bcl-xL) arrest at G0/G1 following culture with anti-IgM but do not undergo apoptosis. These arrested cells can be induced to reenter the cell cycle by ligation of CD40. We have therefore used these cells as a model to study the regulation of the transcription factor E2F, which is critically involved in transit through the cell cycle. We found that anti-IgM treatment induces the appearance of an inhibitory DNA binding complex containing the pRB-related pocket protein p130 together with E2F and a concomitant decrease in "free" E2F, consisting of E2F1 and its partner DP1; these effects were reversed following stimulation via CD40. These changes in free E2F levels were regulated by changes in E2F1 gene transcription, which is at least partly a result of control of E2F1 promoter activity through its E2F binding sites. Transient transfection experiments showed that either E2F1 or the viral oncoprotein E1A, which sequesters pocket proteins, including p130, overcame anti-IgM-induced cell cycle arrest in WEHI-bcl-xL. Taken together, these results indicate that in WEHI-231 sIgM ligation induces the accumulation of hypophosphorylated p130 with consequent inhibition of E2F1 gene transcription and cell cycle arrest. Conversely, ligation of CD40 causes hyperphosphorylation of p130, thereby releasing the repression of E2F1 and other E2F-regulated genes, enabling the cells to reenter the cycle. These results, therefore, provide novel insights into the mechanisms whereby antigen receptors on immature B cells deliver inhibitory signals (leading to negative selection of self-reactive B cells) and how these signals can be modulated by positive signals generated via CD40.