The nonreceptor tyrosine kinase, encoded by the v-AbI oncogene of Abelson murine leukemia virus induces transformation of progenitor B cells. The v-AbI oncogene promotes cell cycle progression and inhibits pre-B cell differentiation. The temperature-sensitive form of Abelson murine leukemia virus offers a reversible model to study the role of v-AbI in regulating growth and differentiation. Inactivation of v-AbI elevates p27 and Foxo3a levels and activates NF-kappa B/Rel, which leads to G, arrest and induction of Ig L chain gene rearrangement, respectively. In turn, v-AbI reactivation reduces p27 and Foxo3a levels, thus permitting G(1)-arrested cells to reenter the cell cycle. However, the cell lines derived from SCID mice that are defective in the catalytic subunit of DNA-dependent protein kinase retain elevated levels of p27 and Foxo3a proteins despite reactivation of v-AbI. Consequently, these cells are locked in the G, phase for an extended period of time. The few cells that manage to bypass the G, arrest become tumorigenic and fail to undergo pre-B cell differentiation induced by v-AbI inactivation. Deregulation of p27, Foxo3a, c-myc, and NF-kappa B/Rel was found to be associated with the malignant transformation of SCID temperature-sensitive form of Abelson murine leukemia virus pre-B cells.