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 cellpermeable N24 peptide induces leukemia cell differentiation and suggest that p55PIK may be a novel drug target for the treatment of hematopoetic malignancies.