The retinoblastoma tumor suppressor protein pRb restricts cell growth through inhibition of cell cycle progression. Increasing evidence suggests that pRb also promotes differentiation, but the mechanisms are poorly understood, and the key question remains as to how differentiation in tumor cells can be enhanced in order to diminish their aggressive potential. Previously, we identified the histone demethylase KDM5A (lysine [K]-specific demethylase 5A), which demethylates histone H3 on Lys4 (H3K4), as a pRB-interacting protein counteracting pRB's role in promoting differentiation. Here we show that loss of Kdm5a restores differentiation through increasing mitochondrial respiration. This metabolic effect is both necessary and sufficient to induce the expression of a network of cell type-specific signaling and structural genes. Importantly, the regulatory functions of pRB in the cell cycle and differentiation are distinct because although restoring differentiation requires intact mitochondrial function, it does not necessitate cell cycle exit. Cells lacking Rb1 exhibit defective mitochondria and decreased oxygen consumption. Kdm5a is a direct repressor of metabolic regulatory genes, thus explaining the compensatory role of Kdm5a deletion in restoring mitochondrial function and differentiation. Significantly, activation of mitochondrial function by the mitochondrial biogenesis regulator Pgc-1α (peroxisome proliferator-activated receptor γ-coactivator 1α; also called PPARGC1A) a coactivator of the Kdm5a target genes, is sufficient to override the differentiation block. Overexpression of Pgc-1α, like KDM5A deletion, inhibits cell growth in RB-negative human cancer cell lines. The rescue of differentiation by loss of KDM5A or by activation of mitochondrial biogenesis reveals the switch to oxidative phosphorylation as an essential step in restoring differentiation and a less aggressive cancer phenotype.