Although it is generally believed that the product of the retinoblastoma susceptibility gene (RB7) is an important regulator of cell proliferation, the biochemical mechanism for its action is unclear. We now show that the RB protein is found in a complex with the E2F transcription factor and that only the underphosphorylated form of RB is in the E2F complex. Moreover, the adenovirus EIA protein can dissociate the EPF-RB complex, dependent on ElA sequence also critical for ElA to bind to RB. These sequences are also critical for El A to immortalize primary cell cultures and to transform in conjunction with other oncogenes. Taken together, these results suggest that the interaction of RB with E2F is an important event in the control of cellular proliferation and that the dissociation of the complex is part of the mechanism by which ElA inactivates RB function.