Although it is generally believed that the product of the retinoblastoma susceptibility gene (RB1) 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 under phosphorylated form of RB is in the E2F complex. Moreover, the adenovirus E1A protein can dissociate the E2F-RB complex, dependent on E1A sequence also critical for E1A to bind to RB. These sequences are also critical for E1A 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 E1A inactivates RB function.