Cell growth and differentiation are usually antagonistic. Proteins of the basic helix-loop-helix (bHLH) family bind DNA and play important roles in the differentiation of specific cell types. Id proteins heterodimerize with bHLH transcription factors, blocking their activation of lineage-specific gene expression and thereby inhibiting cellular differentiation. To examine the effect of Id-2 on cell proliferation, we overexpressed Id-2 in the human osteosarcoma cell line U2OS. Id-2 expression in U2OS reduced the serum requirement for growth and stimulated cellular proliferation by shortening the doubling time and increasing the percentage of cells in S phase. We demonstrated that Id-2 expression was able to reverse the inhibition of cellular proliferation and the block in cell cycle progression mediated by the product of the retinoblastoma tumor suppressor gene pRB. This effect was not associated with changes in the state of pRb phosphorylation in transfected cells. In vitro, unphosphorylated pRb from cell lysates specifically bound Id-2 but was not able to bind a mutated form of Id-2 lacking the HLH domain that also did not antagonize the growth arrest by pRb. In vitro-synthesized pRb containing mutations within the E1A/large T-binding pocket did not bind Id-2. However, wild-type pRb was able to bind to a region of Id-2 corresponding to only the HLH domain. In vivo, a physical association between Id-2 and pRb was seen in cross-linked extracts from SAOS-2 cells transfected with Id-2 and pRb. Our data identify a role for Id-2 in the regulation of cellular proliferation and suggest that the interaction between Id-2 and pRB is a molecular pathway over which synchronous changes in growth and differentiation are mediated in vivo.